ReportUkie
Business Case for an Enhanced Video Games Expenditure Credit: UK
16 Dec 202539 pages~83 min full read
Increasing the Video Games Expenditure Credit (VGEC) to a tiered rate of 53% for projects under £10 million and 39% for larger productions is projected to generate £530 million in additional gross value added (GVA) and 6,000 new full-time jobs over five years.
See it on page 3The proposed fiscal enhancement would raise the UK’s effective VGEC rate to 20.6%, surpassing current rates in France (20.2%) and Quebec (18.2%) to improve international competitiveness.
See it on page 24Every £1 of government investment in the enhanced VGEC is projected to yield a return of £2.12 in combined GVA and tax revenue.
See it on page 38The global video game industry faces significant contraction, with 30,000 layoffs expected between 2023 and 2024 and venture capital funding dropping from $9 billion in 2020 to roughly $3 billion by early 2024.
See it on page 7Indie game sales on platforms like Steam now represent nearly 70% of total full-game revenue, highlighting a market shift toward smaller, cost-efficient production models.
See it on page 8Even under conservative scenarios, the proposed incentive structure maintains a positive economic profile, delivering £1.3–£1.4 in GVA and £0.4–£0.5 in tax returns for every £1 of public expenditure.
See it on page 36The analysis argues that a targeted increase in the Video Games Expenditure Credit (VGEC) would markedly strengthen the United Kingdom’s competitive position within the global video‑games sector. By raising the nominal rate to 53 % for projects up to £10 million and to 39 % for larger productions, the model predicts an additional £530 million in gross value added (GVA) and roughly 6,000 new full‑time jobs over five years. The return on investment is projected at £2.12 of GVA and tax revenue for every £1 spent, positioning the UK as one of the most attractive jurisdictions for game development.
Key findings highlight a worldwide contraction in employment, with 30 000 layoffs expected between 2023 and 2024, prompting a shift toward freelance and subcontracted talent. Venture‑capital funding has fallen sharply from $9 billion in 2020 to just over $3 billion by early 2024, while indie sales on platforms such as Steam now account for nearly 70 % of full‑game revenue. These trends underscore the need for flexible, cost‑efficient production models and a supportive fiscal environment.
Comparative analysis shows that the current UK VGEC effective rate of 14 % is lower than those in France (20.2 %) and Canada’s Quebec (18.2 %). The proposed tiered scheme would raise the UK rate to 20.6 %, matching or surpassing many international competitors and potentially adding an extra 5,000 full‑time equivalents over five years. Across all scenarios, the cost‑benefit profile remains favorable, with GVA returns of £1.3–£1.4 per £1 invested and tax returns of £0.4–£0.5 per £1.
In sum, the enhanced VGEC package delivers a superior economic return by stimulating export‑driven intellectual property creation and supporting both small studios and multinational operations. The model demonstrates that a carefully calibrated incentive structure can offset macro‑economic pressures, sustain employment growth, and secure the UK’s position as a global leader in video‑game development.
