University of Portsmouth research has revealed that the UK video games industry generates £12 billion in Gross Value Added (GVA) annually and supports more than 73,000 jobs across the country.
The comprehensive report, commissioned by TIGA (the trade association representing the UK video games industry), was authored by Professor Homagni Choudhury , Professor Joe Cox and Dr Alan Leonard from the University's School of Accounting, Economics and Finance.
Their rigorous economic analysis reveals the sector contributes £2.2 billion in tax revenues to the Treasury while supporting approximately 28,000 developers in high-skilled roles.
Crucially, the independent research shows most economic activity occurs outside London, with significant regional contributions including £443 million in the North- West, £393 million in Scotland, and £362 million in the West Midlands.
However, the Portsmouth team's research also exposes a critical competitive disadvantage relating to tax incentives. The UK's Video Games Expenditure Credit (VGEC) provides an effective relief rate of just 20.4 per cent, compared to 30 per cent in France and Australia, and 31.9 per cent in Quebec.
The TIGA report has modelled three policy proposals that could dramatically boost the industry:
Raising the UK's Video Games Expenditure Credit (VGEC) from a headline rate of 34 per cent to 39 per cent could create 6,291 jobs and boost GVA by £436.2 million
Increasing qualifying expenditure from 80 per cent to 100 per cent could generate 10,551 jobs and increase GVA by £731.7 million
Introducing an Independent Games Tax Credit at 53 per cent could create 6,952 jobs and boost GVA by £482 million
Professor Homagni Choudhury said: "At a time when the UK government is rightly prioritising growth and jobs, our research shows that the video games sector is already making a significant and growing contribution to both. The industry not only generates and supports high skilled positions, but also stimulates wider economic activity, investment and exports.
"With the right policy environment and enhanced support through measures such as the Video Games Expenditure Credit and Independent Games Tax Credit, the sector has the potential to deliver even greater economic returns and to play an integral role in supporting the UK's long-term growth strategy."
The research addresses a key challenge facing the industry: 78 per cent of UK studios employ four or fewer staff, with many small and medium enterprises struggling to access funding due to limited assets and unpredictable commercial success.
The Portsmouth team's analysis demonstrates that an Independent Games Tax Credit would provide a return on investment of £1.16 in tax revenue for every £1 paid out to developers, while reducing capital constraints on SME studios and enabling more companies to develop their own intellectual property.
The 100-page report represents one of the most comprehensive analyses to date of current Video Games Expenditure Credit levels and provides evidence-based policy recommendations to strengthen the UK's position in the global games market.
Dr Alan Leonard said: "Our independent economic analysis provides robust evidence that strategic investment in the video games sector through enhanced tax credits would generate substantial returns for the Treasury while creating thousands of high-skilled jobs across the UK's regions."
The research comes at a critical time as the UK faces increasing competition from international rivals offering more generous tax incentives to attract video games investment and development.
Professor Joe Cox added: "The UK video games industry punches well above its weight globally, but our research shows that without policy reform, we risk losing our competitive edge to jurisdictions offering more attractive fiscal support."
The 100+ page report is one of the most in-depth analyses to date of current Video Games Expenditure Credit levels,and also highlights the potential for the industry of strengthening VGEC support by the Government. The report includes chapters that examine international comparisons, economic impacts, as well as comprehensive assessments of TIGA proposals.
You can download the report here .
Dr Richard Wilson OBE, CEO of TIGA, said: "The UK games development industry provides high skilled employment, supports regional economic growth and is export focused. Our sector is a success story with considerable potential. However, our industry is not competing on a level playing field and we are at a disadvantage in the competition for inward investment because our existing VGEC is not as generous as some of the tax incentives available in other jurisdictions. Additionally, many SME studios struggle to access finance to scale up and grow.
"The most effective way of driving growth in the UK video games industry is to enhance VGEC. VGEC reduces the cost of games development, which in turn encourages investment and the creation of high skilled jobs in the sector. Our new report shows that an IGTC could create 7,000 jobs including 900 development roles, whilst generating tax revenues for HM Treasury. Strengthening VGEC will promote economic growth and ensure the UK remains a leader in games development."
The University of Portsmouth's School of Accounting, Economics and Finance has established itself as a leading centre for economic impact research, combining rigorous academic analysis with practical policy insights to inform government and industry decision-making.
