M&A and investment in the game sector Tax Tax Taxation of game businesses Seed Enterprise Investment UK game businesses are generally Scheme (SEIS) likely to be undertaken by UK resident The SEIS encourages investment into companies or the UK permanent new (and often high-risk) start-up establishments of foreign companies companies (such as developers or which trade in the UK. Any profits publishers) by providing tax reliefs to of such businesses are subject to UK resident investors who subscribe UK corporation tax on their trading for shares in such companies. SEIS profits, currently 19% for companies enables companies to raise up to with annual profits below GBP50,000, GBP150,000 through the scheme. 25% where profits are GBP250,000 or Investors can obtain tax relief in more and a tapered rate between relation to income tax and capital 19% and 25% for companies with gains tax (CGT) pursuant to their SEIS annual profits in between. investment. This is, however, subject Tax breaks for games to certain time limits and qualifying businesses criteria being met by both the investor and company. Alongside its competitive headline corporation tax rate, the UK has Enterprise Investment a number of tax incentives and reliefs Scheme (EIS) which may assist game developers For larger or more established games and publishers, both in securing businesses which don’t meet the investment (such as the Seed requirements for SEIS, EIS may be Enterprise Investment Scheme (SEIS) available. This is similar in structure and Enterprise Investment Scheme to SEIS – providing income tax (EIS)), and also in developing specific and CGT reliefs for UK tax resident games products (such as the Video individual investors who subscribe Games Tax Relief (VGTR) and the in cash for ordinary shares in Research and Development Tax Relief). qualifying companies. 31