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Budget tax relief to boost UK animation, videogames, high-end TV production

Presenting the 2012 UK Budget, the Chancellor of the Exchequer George Osborne has announced plans to introduce tax relief for three of the UK's key creative industries from April 2013 - animation, video games and high-end TV production - subject to state aid approval and following consultation.

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."

Tax breaks for animation and TV would aim to reverse a trend of UK productions being made overseas and attract foreign companies to make their progammes in the UK. Tax relief for video games could help to increase the sector's contribution to the UK economy by £275m over the next five years.

Benefiting all sectors, the creative industry will be helped as well by the reduction in the main rate of corporation tax to 24% from April 2012, down from the current 26% level. The rate will then be reduced by a further 1% in each of the following two years, and as a result will be 22% from April 2014.

On the high technology side, the Chancellor reveals cities to share £100m to introduce ultra-fast broadband, with additional £50m for further roll-out.

The UK's first Super-Connected Cities include Birmingham, Bristol, Leeds, Bradford, Newcastle, Manchester along with London, Cardiff, Edinburgh and Belfast will be able to offer ultra-fast fixed broadband access, and large areas of public wireless connectivity. The government defines ultra-fast broadband as having a minimum download speed of at least 80Mbps.

Together, the ten selected cities involve providing ultra-fast broadband access to around 1.7 million premises and 200,000 businesses by 2015 while almost 3 million residents would have access to a wireless network.

Facts and figures

- Currently around 600 companies in the UK employing over 4,700 people.
- In 2009, the UK animation industry produced 191 hours of animation worth £100.4m.
- Exports of children's TV programmes (including animation) were worth £148m in 2009.
- Great British animation currently made abroad instead of in the UK includes Thomas the Tank Engine (Canada), Bob the Builder (USA) and Noddy (Republic of Ireland).

Video games
- UK-produced games generated £1.67bn in sales worldwide in 2009.
- As of November 2011, there were 9,000 creative staff working in almost 300 games studios.
- UK consumers buy the largest number of games in Europe. Almost 60% of the UK population play video games, with an average age of 28. 48% of video gamers are women.
- Over five years a games tax relief could create and protect 1,650 studio jobs and increase the games development sector's contribution to UK GDP by £276m.
- Great British video games made in the UK include Moshi Monsters, Little Big Planet and Lego Star Wars.

TV production
- The UK is the second biggest exporter of television content in the world, with exports worth more than £1.3bn per year.
- UK television broadcasters generated revenue of £11bn in 2009.
- The independent television sector contributes £4.2bn per year to the UK economy (GVA) and employs 20,950 people - more than the television divisions of the BBC, ITV, Channel 4 and Five combined.
- Great British TV currently made abroad instead of the in the UK includes Julian Fellowes' Titanic (Hungary), The Tudors (Republic of Ireland) and Birdsong (Hungary).

Story filed 23.03.12

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