George Osborne has confirmed that the government plans to introduce tax breaks for the TV, animation and gaming industries.

The chancellor of the exchequer announced the proposal in his 2012 Budget statement in the House of Commons on Wednesday afternoon, in a bid to boost growth in the UK’s creative sector.

Osborne said a more favourable tax climate will prevent “high-end” TV such as BBC1 drama Birdsong being made abroad, and are designed to keep “keep Wallace & Gromit where they are”.

He said the scheme would build on the existing tax credit model available to the film industry, which generated spending of more than £1bn in the UK last year.

April 2013

The government is aiming to introduce the tax reliefs from April 2013, but the plans will be subject to European Commission state aid approval and a consultation process.

They are part of an ambition to “make the UK the technology hub of Europe” - a key plank in the government’s agenda to get the economy back on the path to growth.

Industry reaction

The announcement has been welcomed across the board, with some of the UK’s most high-profile drama and animation producers revelling in the prospect of being able to produce more content domestically.

“The proposed changes in the UK tax laws regarding television would give the British TV industry a much needed shot in the arm,” said Andy Harries, chief executive of Mad Dogs producer Left Bank Pictures.

“British production talent is responsible for some of the best television in the world and at the moment many productions, which could very easily be shot in the UK, are being made abroad and many talented creatives are moving elsewhere.”

Significant benefit

Stephen Garrett, chairman of Kudos Film and TV added: “The return on this relatively small investment from the Government will significantly benefit the UK’s economy, generating jobs and growth, boosting tourism and giving the UK taxpayer great value for money.”

Ivan Dunleavy, chief executive of Pinewood Shepperton, said the decision “builds on the success of the film tax incentive which has helped deliver record levels of inward investment in the UK”.

Animation boost

“Today’s announcement will hopefully guarantee the long term survival of our industry and ensure it continues to be an industry we are proud of,” said Oli Hyatt, chairman of Animation UK.

“We will continue to communicate with the government as regulation is formed, to make sure we can get the best possible conditions for production in this country.”

Adam Minns, executive director of the Commercial Broadcasters Association (COBA) said: “A properly constructed UK tax credit will help ensure the UK remains competitive in attracting culturally British productions.”

“Tax breaks for games production will ensure that the UK remains at the forefront of video game development. It will also help to rebalance the UK economy away from an over-reliance on financial services towards a high skill, R&D intensive and export focused industry,” said Richard Wilson, chief executive of gaming trade body TIGA.

DCMS response

The Department for Culture Media and Sport has been lobbying the Treasury for the tax breaks since late January and culture minister Ed Vaizey welcomed the announcement.

He Tweeted: “Delighted that George Osborne is consulting on tax credit for video games, animation and high end TV drama.”

A statement on the DCMS website added: “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.”

This article was originally published by Broadcast.