UKIE Urges VGEC Overhaul and Scale-Up Fund Ahead of Autumn Budget

UKIE is calling on the UK government to modernise the Video Games Expenditure Credit (VGEC) in this week's Autumn Budget, and to back a new fund closing the £500,000-to-£2 million growth capital gap for domestic studios.

The trade body wants three things from Chancellor Rachel Reeves' budget: a modernised VGEC, a Games Scale-Up Fund, and incentives strong enough to stop studios and talent relocating to countries with better tax credits.

"Reforming VGEC is essential to ensuring the UK remains a competitive place to build and grow games businesses," UKIE CEO Nick Poole told GamesIndustry.biz.

He said UKIE has "led sustained engagement with government on these priorities, working with our members and industry partners to build the evidence and make the case for reforms that will help British games businesses compete, attract investment and grow."

What would the new tax structure look like?

UKIE, TIGA, and the UK Video Games Fund have jointly proposed a tapered 'games growth' fund. It would offer 53% support for projects with budgets up to £15 million, and 39% for those between £15 million and £23.5 million.

"This would provide more competitive support for studios of different sizes and help attract greater investment into UK games development," said Poole.

The plan also targets the current restriction on qualifying expenditure, which sits at 80% and, in Poole's words, "limits the support available even when significant development activity takes place in the UK."

The rules must also catch up with how games are actually built now — live-service development, downloadable content, co-development, and projects brought into the UK mid-production. Poole said there are "several types of games and production models where the current rules can create barriers or uncertainty."

His examples are concrete. Co-development projects struggle because "international partners, or work brought into the UK, can encounter questions around qualifying expenditure and eligibility." Live-service and DLC work "do not always fit neatly into rules designed around more traditional production models." Mobile and non-narrative games "can face challenges meeting the cultural test, despite being successful examples of British game development." Indie studios can hold a strong prototype and credible commercial potential but lack the capital to reach full production.

What does the Games Scale-Up Fund change for studios?

Context matters here. Last year the government launched a £30 million fund for British game development, which began rolling out earlier this year and produced the largest group of funded indie studios since the UK Games Fund launched in 2015. Grants run up to £250,000 each.

The problem, Poole said, is a "gap in support for studios looking to move beyond early-stage funding." A studio that has outgrown £250,000 grants but cannot yet raise millions falls through the cracks.

"A Games Scale-Up Fund would provide growth capital to help promising studios expand, retain ownership of their IP, and attract further private investment, creating the conditions for more British success stories like Hello Games, Rebellion, and Team 17," he said.

The fund would "complement rather than duplicate the UK Games Fund," delivered through an established investment vehicle — potentially working with the British Business Bank and specialist games-industry expertise. The proposed co-investment model would see the British Business Bank contribute up to two-thirds of funding alongside private investors. A £50 million fund, for example, would split into roughly £33 million public money and £17 million private capital. Put another way, every public pound would pull in about 50 pence of private investment.

Rebellion co-founder and CEO Jason Kingsley backed the proposals, saying they "would help British developers grow, create jobs and compete on the global stage."

"Companies like ours are increasingly developing original British IP that can be enjoyed across games, comics, film and television, but the current system of tax reliefs doesn't fully reflect this," Kingsley said. "We want to see a system that better supports businesses creating and retaining original British IP, helping them develop successful franchises across multiple formats and reinvest the value they generate back into the UK economy."

Why the urgency now?

The international numbers explain the pressure. Canada runs "an established system of federal and provincial incentives," particularly in Quebec. France offers a 30% tax credit. Ireland has a 32% Digital Games Credit. Australia provides a 30% tax offset for qualifying games development.

"These measures have helped make other countries attractive destinations for international investment and games production," said Poole. "The UK's VGEC operates on a similar principle, but our members are calling for it to be modernised and made more competitive to ensure the UK continues to attract investment and retain skilled jobs."

The stakes are operational, not abstract. Competition shapes where studios place major development projects, co-development and specialist work, live-service operations, and expansion plans. "When development moves overseas, the UK can lose skilled jobs, expertise, intellectual property and the wider investment that successful studios generate," Poole said.

The Autumn Budget lands this week. Whether Reeves answers UKIE's call on VGEC taper rates, the 80% expenditure cap, or a British Business Bank-backed scale-up fund will signal how seriously the government treats games as a growth sector — and whether studios weighing Canada or Ireland against London, Leamington Spa, or Dundee see the calculus shift.