The UK video games sector contributes £12 billion annually to the economy, supports over 73,000 jobs, and generates £2.2 billion in tax revenue, according to a new report by TIGA, the trade association for the industry. Most economic activity occurs outside London, with regional hubs such as the North West (£443m), Scotland (£393m), West Midlands (£362m), and East of England (£362m) making significant contributions.
TIGA’s report highlights that the UK faces a competitive disadvantage for inward investment compared with countries such as France, Australia, and Quebec, where tax incentives for games development offer effective relief rates of 30–31.9%, compared with 20.4% under the UK’s Video Games Expenditure Credit (VGEC). Small and medium-sized studios are particularly affected, with 78% employing four or fewer staff and struggling to access funding.
The report recommends three measures to boost growth: introducing an Independent Games Tax Credit (IGTC) offering 53% relief on qualifying costs up to £23.5 million, raising VGEC rates from 34% to 39%, and increasing the proportion of qualifying expenditure from 80% to 100%. Analysis suggests the IGTC alone could add £482 million in Gross Value Added and create nearly 7,000 jobs while generating £156 million in tax revenue, exceeding the initial cost to HMRC.
The report, authored by economists from the University of Portsmouth, combines industry data with independent analysis to assess economic impact, international comparisons, and the potential outcomes of strengthened tax incentives for the UK games sector.
