Observed Signal · Oct 27, 2026 · Policy Update · Source: GamesIndustry.biz · Impact: 4/5 · Sentiment: Positive
UKIE Urges UK Government to Modernise VGEC Tax Credit
Ahead of the Autumn Budget, UKIE is urging the UK government to modernise the Video Games Expenditure Credit (VGEC) to keep the UK competitive in games development. They propose a tapered 'games growth' fund providing 53% support for budgets up to £15 million and 39% for budgets between £15 million and £23.5 million. They also call for reform of the 80% qualifying expenditure cap and for rules to better accommodate live-service games, DLC, co-development, and work brought into the UK. Additionally, they propose a Games Scale-Up Fund to bridge the £500,000 to £2 million growth capital gap, potentially co-investing with the British Business Bank. The push is driven by international competition from Canada, France, Ireland, and Australia, which offer attractive tax incentives.
This policy push directly impacts the UK's competitiveness in games development, which is a significant part of the broader digital entertainment and advertising ecosystem. Changes to VGEC could influence where major development projects are located, affecting tax revenue and employment in the creative industries.
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Key Takeaways & Evidence Grounding
- UKIE urges UK government to modernise Video Games Expenditure Credit (VGEC) ahead of Autumn Budget.
- Proposed tapered 'games growth' fund offers 53% support for budgets up to £15 million and 39% for £15 million to £23.5 million.
- UKIE calls for reform of the 80% qualifying expenditure cap and rules to better suit live-service and co-development models.
- Proposed Games Scale-Up Fund aims to address the £500,000 to £2 million growth capital gap.
- International competition from Canada, France, Ireland, and Australia cited as a reason for reform.
Connected Companies & Entities
1 Entity mapped“Games Scale Up Fund could be provided via the British Business Bank using a co-investment model.”
Ontology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
UK Games Industry Eyes Growth as Government Boosts Support
UKIE CEO Nick Poole and TIGA CEO Richard Wilson outline the UK games sector’s strengths and challenges ahead of a potentially strong 2026. UK consumer spend reached £8.76bn in 2025, but employment contracted to 27,347 and startup formation has fallen sharply. Industry groups stress skills shortages, a funding gap for studios scaling from micro to mid-size, and the need for improved tax relief and grants. The government has pledged £30m — including £28.5m for the UK Games Fund — and recent steps such as SIC code classification and recognition of games as a 'frontier industry' are welcomed, while trade bodies recommend enhancing the Video Games Expenditure Credit (VGEC) to unlock further investment and growth.
UK expands IP‑backed lending for game studios
The UK government announced measures to expand SME finance, including support for intellectual property (IP)-backed lending for game studios. The package allocates £500 million to the British Business Bank's ENABLE Guarantee programme and expands the Growth Guarantee Scheme to facilitate an additional £2 billion of SME lending per year by 2028/29. The Growth Guarantee Scheme offers a 70% government guarantee on commercial loans up to £2 million and is expected to support about 20,000 businesses annually (up from 8,000). Trade body Ukie and the UK Video Game Council worked with the British Business Bank to help establish IP-backed lending as a route for studios to use their IP as collateral and access more debt finance.
Innovate UK opens £10m Createch fund for game developers
Innovate UK has launched a Createch funding competition offering up to £10 million in grant funding to support early-stage innovation that goes beyond proof of concept. Grants will range from £100,000 to £500,000 per project, with eligible projects required to have total costs between £100,000 and £500,000, run nine to 12 months, start by 2027-01-01 and finish by 2027-12-31. The competition closes on 2026-08-11. Projects must carry out work in the UK, intend to exploit results in the UK and spend most of the funding domestically. The call targets video game and interactive entertainment companies and encourages proposals that combine multiple 'frontier industries' (animation, VFX, film, advertising, music, performing and visual arts). Ukie CEO Nick Poole is quoted urging studios to apply; Innovate UK notes similar programmes have roughly a 10% success rate.
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