The UK's games industry has been given a massive boost after the European Commission granted it cultural tax relief, which could bring an extra £188m into the sector.

Under the policy, games companies will be able to claim back up to 25 per cent of a game's development costs.

Tiga, an industry body which has lobbied heavily for a tax relief scheme for games, said the decision would help the UK reach "the forefront of video game development".

The scheme was originally announced in George Osborne's 2012 budget, but was delayed when the European Commission launched an investigation. At the time it argued if the UK games industry didn't need tax assistance but has since found it would "decline considerably" without help.

"Our initial doubts have been dispelled. The proposed aid for video games is indeed focusing on a small number of distinctive, culturally British games which have increasing difficulties to find private financing," said Joaquin Almunia, vice president in charge of competition policy at the Commission.

Games developers will receive tax breaks on a points based system, with points awarded for setting a game in the UK or other EEA country, using UK or EEA characters and hiring UK staff.

As well as bringing in an extra £188m over the next five years more than 4,600 jobs will also be safeguarded, Tiga claimed.

UKIE, which represents game developers in the UK, said the news was a great moment for the industry:

"This is a huge boost to the UK games and interactive entertainment sector and the start of a great new era of games production in the UK," said CEO Jo Twist. "We are delighted the European Commission recognised the clear market failure for the production of games with a British and European flavour, using UK-based creative and highly skilled talent."

Companies looking for more information about the new games tax relief scheme should read UKIE's 'need to know' PDF, available here .