Gambling Taxes in the UK

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Although gambling was largely left unscathed by this year’s budget, a proposed overhaul of betting taxes could see operators face higher levies. This comes after budget filings revealed the government is considering increasing Remote Gaming Duty and General Betting Duty.

For the uninitiated, betting tax is a point-of-consumption charge that applies to the profits bookies make on their winning bets. This wasn’t always the case, however; until 2001 punters paid a 9% tax on their winnings.

Legality

After a series of legal challenges, the ECJ ruled that VAT was ill-suited to gambling transactions because they don’t involve a traditional exchange of goods or services. As a result, the UK no longer applies VAT to gambling, but instead has gambling excise duties – often referred to as betting tax in the UK – that are specifically targeted at the activities involved.

General Betting Duty (GBD) is payable on fixed-odds bets placed with a bookmaker, sports and financial spread bets placed via betting exchanges, and pool bets on horse and dog racing. Meanwhile, Remote Gaming Duty (RBGD) is payable by operators who accept bets from customers via a telephone, mobile phone, text message or computer. RBGD is currently levied at 21% of the gross profits of the operator.

Taxes

Whether you’re betting on the Grand National or spinning a few hands of poker, your winnings aren’t taxed in the UK. Instead, it’s the gambling operators who foot the bill. That’s because the UK is a legal and regulated gambling market.

Nevertheless, some are worried that a UK gambling tax increase could damage the industry. Grainne Hurst, CEO of the Betting and Gaming Council, said that proposals driven by politics rather than evidence could push customers into the black market, where there are no tax incentives and less regulatory protection.

The current UK gambling tax system consists of several different taxes, including remote gaming duty (RGD), betting duty, pool betting duty, and bingo duty. RGD is 21% of operator gross profits, and betting and pool betting are taxed at 15%. Bingo duty is a fixed rate on promoters’ profits, and bingo machines are taxed at a higher rate than those covered by MGD. Spread bets aren’t subject to any of these taxes, because they do not involve buying or selling assets.

Regulation

Whether you’re running a slick online betting site, a lively high-street bookmaker or engaging in spread betting, it’s important to understand your tax rules. If you serve customers in the UK, you must register and pay the appropriate gambling taxes. This includes general betting duty (GBD), sports and financial spread betting duties, and pool betting duty.

The Chancellor of the Exchequer has recently made several changes to betting tax. In the past, players had to pay a betting duty of 9% when they placed a bet. However, this was scrapped by Gordon Brown in 2001. In the future, it’s expected that UK remote gambling tax will be consolidated into a single tax, with the aim of simplifying and future-proofing the system.

In the meantime, a spokesman for the Treasury said that “it was clear from user research and discussions with industry stakeholders that RGD should not apply to ‘in-game spins’.” These are single spins of a wheel that take place during the course of a game, and do not represent the start of a new game.

Online betting

Gambling is a large industry in the UK, and it generates substantial taxes for the government. These taxes are based on the type and size of winnings. There are several different gambling tax rates, including Remote Gaming Duty, which is 21% of operator gross profits, General Betting Duty, which is 15%, and Pool Betting Duty, which is 15% of net stake receipts.

In an effort to get a bigger slice of the pie, the government introduced a new “point-of-consumption” tax in 2014. This meant offshore betting companies had to pay the UK tax on profits earned from customers in the UK, even if they were located in a tax haven such as Gibraltar.

As a result, many betting sites moved their operations offshore. While this move did not affect players directly, it did reduce the competitiveness of British-based operators. It also made it harder for players to find legitimate betting sites. In addition, it could lead to a black market for gambling and betting.