UK chancellor George Osborne has confirmed in today’s budget that R&D tax credits are to rise by 200 percent.
The increase will take affect from next month, with it increasing to 225 percent in 2012.
The raise is a 35 percent increase, is in line with recommendations made by development organisation TIGA and is backed by Labour.
The government of the United Kingdom is to hold a consultation on closing a tax loophole that allows online stores like Play, Amazon, and other major online stores to sell products, including games, at a major discount by being based in Jersey.
As of right now, major retailers including Amazon, Play, The Hut, Tesco Direct and HMV run their online operations from an area of Jersey which is free of VAT, meaning they can cut 20% off the retail price right out of the gate.
The loophole only applies to items under £18.
The end result is cheaper games and hardware online, but also means that the government loses out on billions of pounds in tax revenue.
Speaking in parliament as part of today’s budget, Chancellor George Osborne announced that the government will consult on the issue this May with an aim of countering “the continued marketing and use of highly aggressive and artificial tax avoidance schemes”.
If that happens, there’s a significant chance that the prices of games online could rise as retailers struggle to maintain profit margins.