Wednesday, March 21st, 2012 Posted by Jim Thacker

UK government announces animation tax incentives
“It is the determined policy of the government that we keep Wallace and Gromit exactly where they are”. UK Chancellor George Osborne announces tax breaks for the British animation industry. Video: ITN.

The British animation and games sectors are to get tax breaks similar to those currently available to the film industry, UK Chancellor of the Exchequer George Osborne has announced in his 2012 budget statement.

Films currently qualify for corporation tax relief, if at least 25% of the production costs – including post-production and visual effects – relate to activities in the UK: a scheme recently extended until 2015.

Osborne said he planned to introduce corporation tax relief for the video games, animation and high-end television industries from April 2013.

The move has been described as a “Wallace and Gromit tax break” by some UK papers, in reference to the characters created by Aardman Animations: one of the studios which has campaigned for changes to UK law.

Miles Bullough, Aardman’s head of broadcast and development, said that the tax credit would be “transformational” for the industry.

“We have seen a dramatic decline on UK television of home-produced animation and we now have a shot a reversing that trend,” he commented. “The credit will create thousands of UK jobs and our research shows that there will be a long-term financial gain for the UK.”

Good for UK games
The move has also been welcomed by the games industry, which has long campaigned for such tax breaks.

Richard Wilson, CEO of games industry trade body TIGA, predicted that the move would generate and safeguard 4,661 UK jobs, both direct and indirect.

“Like a boxer knocked down by his opponent, we refused to accept defeat and kept getting back in the ring,” he said. “This victory will benefit not just the UK games development and digital publishing sector, but also the wider UK economy.”

Backlash from the US?
The move is likely to further anger US studios, which have long complained that local VFX jobs are at risk from such overseas tax incentives.

As yet, the trade press are only reporting the basic facts of the announcement, while the campaigning VFX Soldier blog has posted the news, but nothing more. We’ll update if they post more detailed responses.

Read coverage of the announcement from the left-wing The Guardian newspaper

And coverage of the same announcement from the right-wing Daily Mail

And from the middle of the political spectrum on the BBC