While delivering his 2010 budget, UK Chancellor Alastair Darling announced that game developers in the region will soon be able to apply for tax relief, subject to the passing of a ‘Cultural Test.’

The news comes after years of extensive lobbying on the part of TIGA, the trade association representing the UK’s games industry, as well as other game industry figures and groups based in the UK.

In a statement released late yesterday, the Department for Culture, Media and Sport said that it will be “working closely with HM Treasury, BIS and the video games industry in the coming months to develop the system for tax relief that will bring the maximum benefit to the video games industry and the wider economy,” adding that the tax breaks will most likely follow the model currently in place for motion pictures.

Chancellor of the Exchequer, Alistair Darling, during his budget address to Members of Parliament said:

“I will offer help to the computer games sector, similar to the steps which are helping restore the fortunes of the British film industry. This is a highly successful and growing industry, with half its sales coming from exports, and we need to keep British talent in this country.”

CEO of TIGA, Dr Richard Wilson, said in a statement regarding the decision to offer tax relief to game developers in the UK:

“This is an inspired decision. In backing TIGA’s Games Tax Relief the Government has chosen the future over the past, growth over decline, success over failure. Games Tax Relief will increase employment, investment and innovation in the UK video games sector.

“Our research shows that Games Tax Relief over a five year period should create or protect 3,550 graduate level jobs, increase or safeguard £457 million in development expenditure and encourage developers to adopt new business models and create new Intellectual Property. Games Tax Relief will ensure that the UK remains a world leading developer of video games. Games Tax Relief is good for the UK video games industry, good for UK consumers and good for the UK economy.

“For Games Tax Relief to be announced in the Budget is the decisive breakthrough that TIGA has campaigned for. Ministers have made the right decision at the right time for the right industry. Government Ministers are to be warmly congratulated for their visionary decision. TIGA now looks to the Opposition parties to give their full support to Games Tax Relief in the Finance Bill.”

Game developers looking to qualify for tax breaks will be subject to the passing of a Cultural Test, however no further details regarding this procedure were announced.