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Budget boost for British animation, TV and games studios

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Titanic: Maria Doyle Kennedy as Muriel Batley and Toby Jones as John Batley

© ITV

Chancellor George Osborne has today announced plans to introduce tax relief for three UK creative industries - TV production, animation and video games.

In his Budget 2012 statement, Osborne said that tax breaks for animation and TV would 'reverse a trend of UK productions being made overseas and attract foreign companies to make their programmes in the UK'.

He said that tax relief for the UK video games industry could help increase the sector's contribution to the UK economy by £280 million over the next five years.

The tax credits for the three creative industries, joining the existing tax relief for the UK film industry, will come into force from April 2013.

The exact level of relief will be confirmed in due course, but it is expected to be similar to current levels of a 20-25% discount on corporation tax for UK productions.

"The film tax credit, protected in our spending review, helps generate more than £1bn of film production investment in the UK in the last year alone," the chancellor said.

"Today I am announcing our intention to introduce similar schemes for the video games animation and high-end TV production industry."

The UK is the second biggest exporter of television content in the world, with exports of programmes worth more than £1.3 billion per year.

Independent production studios in Britain contribute £4.3 billion per year to the UK economy and employ 20,950 people, more than the television divisions of the BBC, ITV, Channel 4 and Channel 5 combined.

Major new productions include ITV's Titanic series, written by Julian Fellowes, which has already been pre-sold to more than 80 countries.

There are currently around 600 UK animation companies employing over 4,700 people. In 2009, the industry produced 191 hours of content worth £102m, and studios such as the multi-Oscar-winning Bristol studio Aardman Animations have gained global renown.

Bob the Builder
UK children's TV shows were worth £150m in 2009, including perennial favourites such as Thomas the Tank Engine and Bob the Builder.

Andrew Ledger, the relationship director at Barclays technology, media and telecommunications (TMT) division, said that both the TV and animation industries have long called for tax relief, meaning today's announcement will be welcome news.

"We will have to wait and see what budget level the government set the bar in terms of eligibility for the credits, but hopefully this will be the first step in putting Britain back on the map as a cost-effective destination for drama production," he said.

"That should tempt more overseas production companies to shoot dramas here in the UK, just as we've seen happen in film. That potential influx of foreign investment could also filter through to local, British communities, who will reap the benefits of an increased industry presence across a wide array of new filming and production locations.

"The key to the success of the scheme will be how well the government can publicise the credits but we hope that Britain will start taking spend from other countries."

Ledger said that UK animation has arguably suffered more than others due to the lack of tax relief, largely due to stiff competition from more "cost-effective" countries, such as Ireland.

"Given Barclays has funded circa £4.5m of animation in the past two years that was done overseas because of tax credit, today's announcement couldn't have come soon enough," he said.

"Perhaps now we'll see more foreign investment in the sector which will protect the industry and wealth of talent we have in this country."

UK games industry body TIGA has long called for the games industry tax relief, as British studios generated £1.7bn in sales worldwide in 2009, but have faced tough competition from countries that offer state supported financial aid, such as Canada and France.

As of November 2011, there were 9,000 creative staff working in almost 300 UK games studios, and over five years it is estimated that the tax relief could protect 1,650 studio jobs and increase the games development sector's contribution to UK GDP by £280 million

Paul Durrant, the director of business development at Abertay University, which teaches many courses in computer games production, said that today's announcement is a "breakthrough" for the industry.

"By explicitly stating that our computer games industry has the same status as the animation, film and TV sectors, the UK government has shown it is serious about making Britain an international leader in games production once again.

"What the UK economy needs is a better environment for early stage, start-up businesses, and the proper support for companies to then grow and expand.

"The tax relief measure offers a more stable business environment for later stage, growth companies to thrive and stay in Britain, boosting the nation's creative and economic output."

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