Gambling Taxes in the UK: A Comprehensive Guide

Gambling taxes in the UK

This article discusses gambling taxes in the UK in detail – both from the POV of players and operators. Regardless of whether you gamble for fun or as a profession, it's worth reading till the end to gain a complete understanding of the tax landscape in the country.

First and foremost, let’s address the elephant in the room:

Is Gambling Taxable In The UK?

The United Kingdom is one of those countries where gambling is tax-free, but only for resident players. No matter your location in the country, your winnings do not attract any tax, which is why you get to keep it all. However, you don’t get any relief on losses during tax filing.

Do note that gambling is considered a legal activity and is fully regulated in the country. The UK government benefits from the industry by collecting duties from real money gambling operators to fill its exchequer.

The UK Gambling Commission (UKGC) is responsible for licensing gambling businesses and the UK's tax, payments and customs authority – HM Revenue & Customs (HMRC) is responsible for taxing them.

Accordingly, players are kept out of the purview of tax on gambling winnings in the UK. The rate of tax for the operators is decided based on their operations and the games they offer, viz:

  • Arcades
  • Betting
  • Bingo
  • Casinos
  • Gaming machine providers
  • Gambling software providers
  • Lottery operators
  • External lottery managers
  • Remote gambling (online and by phone) with British-based equipment.

This brings us to our next and most obvious concern.

Do You Have to Pay Taxes for Gambling Offshore?

As a player, you are not liable to pay any tax in the UK for gambling at an offshore destination from within the country. However, as an offshore operator accepting players from the UK, you would normally be taxed.

This is because in order to operate in the UK market, all online gambling sites must be licenced by the UKGC regardless of their physical location. These sites are then required to pay the same tax on their gross profit as their UK counterparts.

This, in turn, ensures that even offshore operators contribute to the government exchequer and reduces the likelihood of changes that might rub players the wrong way.

It is not a bullet-proof system though. There are hundreds of online gambling operators that accept UK players which are not licenced by the UKGC and do not contribute with tax to the country. This is because it is very difficult for the UKGC to legally hold casinos in certain jurisdictions (such as Curacao) liable for not having a licence.

In turn, these gambling sites do not have to follow the stringent player protection rules set up by the UKGC. Here at FWC, we do not recommend using such a site, but only recommend UKGC-licenced fast withdrawal casinos that are safe and reliable and whose operations contribute to the country via taxes.

Are Winnings of Professional Gamblers Subject to Tax?

HMRC treats casual and professional players alike in terms of taxation. The same is confirmed in its Business Income Manual, where HMRC has stated this:

The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade.’

The UK government does not recognize professional gambling, such as poker as a trade. Hence, the winnings of professional gamblers, which is basically their income, go tax-free.

However, professional players gambling outside the UK may be liable to pay local taxes. For instance, Las Vegas levies a federal withholding tax on winnings. The good news is, as a non-resident, you are eligible for a refund.

When Can Professional Gambling Amount to a Trade?

When a professional gambler carries out organized activities to generate profit from the gambling public, his profession is considered a trade. In such cases, the generated profit shall be taxed as income.

For instance, professional gamblers who get paid for making public appearances or representing gambling establishments publicly may be subject to Income Tax, which, of course, would not be on the winnings, but on the remuneration, which is considered their non-gambling income.

Also, organised activities by casino operators and bookmakers to generate profit from the gambling public amount to trading. For instance, if a casino or bookmaker places layoff wagers as part of their trade, the winnings would be considered profit as this activity is like gambling with the knowledge that the odds are in the bettor’s favour.

Should Professional Gamblers Declare Their Winnings?

While a professional gambler’s winnings are outside the scope of tax in the UK, it is good practice to declare the profits to HMRC. The reason is discussed in the next segment.

Why Should You Keep Records of Your Expenses and Winnings?

Reporting gambling expenses and winnings on tax returns is not mandatory in the United Kingdom. However, most professional gamblers make it a point to consult an accountant to maintain personal records of their gains and losses.

As already discussed, their winnings are not subject to taxation. Nevertheless, keeping a record of one's performance offer three main advantages:

  • Easy tracking of gambling profits and losses.
  • A ready explanation for suspicious-looking income, especially when the sole source is gambling.
  • Avoiding being labeled a trade and thereafter, taxed.

Are Gambling Losses Deductible During Tax Filing?

Regardless of whether you are a casual or a professional gambler, you cannot request relief of tax on your gambling losses during tax filing.

What Are the Gambling Taxes for Casino Operators and Bookmakers?

The UK government collects several types of gambling taxes from operators to fund public services, which are as follows:

Tax TypeActivityTax Rate
Bingo DutyBingo gaming10% on gross profits
Gaming DutyOffline casino gaming15% on the first £2,686,000 gross profit.
20% on the next £1,852,000 gross profit.
30% on the next £3,243,000 gross profit. 
40% on the next £6,845,000 gross profit. 
50% on the remainder of gross profit.
Remote Gaming DutyOnline casino gaming21% on gross profits.
Lottery DutyLottery12% of the following: The total stake amount paid during an accounting period total stake amount payable on tickets or chances taken during the accounting period.
General Betting Duty Horse racing, dog racing, betting exchange3% on the gross profits from bookmaking for financial spread bets.
10% on the gross profits from bookmaking for all spread bets.
15% on the gross profits from bookmaking for fixed odds and totalisator bets on horse or dog races.
15% of the commission charged by betting exchanges to UK users.
Pool Betting DutyOn betting activities other than horse racing and dog racing15% on net pool betting receipts.
Machine Games Duty Slots, fruit and quiz machines
5% on the gross profits from dutiable machine games where the maximum cost of play doesn’t exceed 20p and the maximum prize doesn’t exceed £10.
20% on the gross profits from dutiable machine games that aren’t Type 1 and in which the cost to play doesn’t exceed £5.
25% on the gross profits from dutiable machine games where the maximum cost of play doesn’t exceed £5.
Bingo Duty

Bingo Duty

What Is It?

Bingo Duty is a tax paid by operators on the profits made from organizing and promoting real money Bingo in the UK except:

  • Bingo played at your home
  • Bingo on a machine covered by Machine Games Duty (discussed later)
  • Bingo played for free and for non-profit purposes
  • Bingo played at amusement arcades and traveling fairs where the stakes and prizes are below specified limits
  • Small-scale Bingo promoted by a club, organization or association of people without a Bingo operating licence, provided that:
    • Only members or their guests play
    • Winnings or stakes don’t exceed £500 in a day, or £7,500 within 4 or 5 weeks that end on the last Sunday of a calendar month

Please note that Bingo Duty is chargeable on all versions of eligible Bingo games including versions grouped under a different name.

Also, online Bingo – whether offered offshore or in the UK – doesn’t attract Bingo Duty. Instead, it attracts Remote Gaming Duty, which will be discussed later in this article.

What Is the Current Rate of Bingo Duty?

The current rate of Bingo Duty is 10% on gross profits (Bingo receipts minus paid-out winnings). Bingo receipts are payments received from players in exchange for allowing them to play Bingo. They include the following:

  • Bingo cards
  • Participation fees
  • Stakes from Main Stage Bingo
  • Stakes from Combined Bingo
  • Stakes from Prize Bingo

Bingo receipts don’t include the following:

  • Admission fees
  • Bingo club membership fees
  • Catering income

Paid-out Bingo winnings that are subtracted from the Bingo receipts to calculate gross profit include the following:

  • Cash prizes
  • The value of prizes that aren’t cash
  • The value of prizes that are redeemable vouchers

No Bingo Duty is charged if winnings exceed receipts. In such cases, losses can be shown while filing returns. Also, the payable Bingo Duty for the next accounting period will be reduced.

How Should an Operator Pay Bingo Duty?

New operators liable to pay Bingo Duty must register with HMRC at least 14 days prior to organizing or promoting any Bingo game. Small-scale operators exceeding the exemption limits must inform the HMRC within 5 days from the date of exceeding the limits.

Operators must also send their completed monthly returns and payments to the HMRC in a way the latter receives them on or before the 15th day from the last date of the accounting period.

If the 15th day is a Saturday, Sunday or bank holiday, the previous working day would be considered the last day for receipt.

The Bingo Duty return (BD510) can be submitted to HMRC online. Even if you don’t have to pay anything, you should still submit the return. HMRC should be intimated beforehand about any unavailability with a specific mention of the dates.

What Are the Penalties?

Penalties are charged for:

  • Total non-payment of Bingo Duty
  • Inadequate payment of Bingo Duty
  • Delayed registration as Bingo Duty payer
  • Delayed submission of return
  • Inaccurate return
  • Inaccurate tax documentation
  • Not informing HMRC about low duty assessment
  • Not notifying HMRC about changes in Bingo business on time

Bingo operators who disagree with any tax decision can challenge the penalty by sending an appeal to the HMRC.

Should Records Be Kept?

Every Bingo Duty payer must keep the necessary record for at least 3 years. This will help them in two aspects:

  • Calculate Bingo promotion profits
  • Enable HMRC to calculate any Bingo Duty that’s due

Is VAT Applicable on Bingo Duty?

Bingo Duty in general is exempted from VAT.

For more information, please check Bingo Duty in the UK.

Gaming Duty

Gaming Duty

What Is It?

Gaming Duty is a tax on the profits of operators who offer casino games that take place in the UK. It is calculated on the gross profit (stakes accepted minus winnings paid out). Please note that Gaming Duty isn’t applicable to dutiable machine gameplay and casino games offered over the internet.

Gaming Duty is levied on operators who

  • Hold a casino operating licence under the Gambling Act 2005 and offer the games with the licence in force
  • Offer premises for applicable gaming
  • Manage or organise applicable gaming on unlicenced premises

What Is the Current Rate of Gaming Duty?

The current rate of Gaming Duty is as follows:

  • 15% on the first £2,686,000 gross profit
  • 20% on the next £1,852,000 gross profit 
  • 30% on the next £3,243,000 gross profit 
  • 40% on the next £6,845,000 gross profit 
  • 50% on the remainder gross profit

Please note that unregistered casino gaming attracts Gaming Duty at a rate of 50%.

How Should an Operator Pay Gaming Duty?

Operators offering casino games must register as a company, sole proprietor, or unincorporated body by sending a duly filled form GD56 Application for Gaming Duty to HMRC at least 14 days prior to starting their services.

On the other hand, partnerships require filling and sending form GD57 Application. Registration as a group requires filling and sending form GD60 Application 90 days prior to being treated as a group.

Changes in the registration application (form GD56) must be informed as follows:

  • Change of premises – form GD58
  • Changes affecting partner companies that are liable to pay Gaming Duty – use form GD60
  • Changes affecting partners that are liable to pay Gaming Duty – form GD57

Returns and payments must be made on a half-yearly basis. Upon the end of one accounting period, the Gaming Duty must be calculated using form GD95. The Gaming Duty must be paid within a month from the end of the accounting period.

What Are the Penalties?

Failing to meet obligations or delaying Gaming Duty payments could amount to a penalty.

Should Records Be Kept?

Records must be kept as per the mandate of the UKGC. Additionally, an operator must keep all accounts, records and documents used to complete returns for at least 3 years.

Is VAT Applicable on Gaming Duty?

Gaming Duty is normally exempt from VAT.

For more information, please check Gaming Duty in the UK.

Remote Games Duty

Remote Gaming Duty

What Is It?

Remote Gaming Duty is a tax on the profits made by remote gaming operators who provide online or remote gambling services to customers located in the UK.

It was introduced in the country in 2014 as part of the government's efforts to regulate online gambling and ensure that operators pay their fair share of taxes. Any business with a remote gaming operating license must register and submit their returns online for Remote Gaming Duty.

What Is the Current Rate of Remote Gaming Duty?

The current rate of Remote Betting Duty is set at a rate of 21% on gross profits made by remote gaming operators on their UK-based customers. Until 1st April 2019, the rate was 15%.

This tax is also charged on any freeplays (online gambling free games, introductory bonuses and matched deposits) offered by the business. The following are excluded from the calculations:

  • Play-throughs from freeplays
  • Winnings that cannot be withdrawn
  • Winnings that are only for re-wagering

Remote Betting Duty is not charged on stakes in games that are completely free or offer winnings in only freeplay. However, in the latter case, the initial stakes will be taxed.

How Should an Operator Pay Remote Gaming Duty?

The responsibility for paying the Remote Gaming Duty falls on the remote gaming operator who must register the business with the UK Gambling Commission at least 31 days prior to starting the services. Businesses based in the following countries are an exception:

  • The UK
  • The EU
  • Gibraltar
  • The Isle of Man
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa

For them, the registration window is 14 days prior to starting the business. HMRC-approved representatives can be appointed by businesses that don’t operate in groups unless they are based in:

  • The EU
  • The UK (excluding the Channel Islands)
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa
  • In Gibraltar and the Isle of Man – jurisdictions in agreement with the UK to enforce gambling tax

Operators liable to pay Remote Gaming Duty may be required by the HMRC to pay 6 months of estimated duty as security if their representatives show a history of incompliance with tax obligations. This amount can be paid as:

  • A cash deposit
  • A bank guarantee
  • A performance bond
  • Or by opening a joint account with HMRC

In case of mistakes or changes in registration details, the HMRC must be intimated within a month’s time from the registration date or when the changes were implemented, whichever is later. These include the follows:

  • Business type
  • Name or address
  • Opening or closing of business
  • Cease of trade
  • Agent addition
  • Registration for another tax
  • Change in return accounting period
  • De-registration (notification to be sent 14 days prior to implementation)

Remote Gaming Duty payers must send returns and payments within a 30-day window from the end of their accounting period. This can be done online as well as on paper. The accounting period for calculating Remote Gaming Duty is 3 calendar months.

If the last day of the 30-day window is a Saturday, Sunday or bank holiday, the 29th day is considered the last date for sending returns and payments.

What Are the Penalties?

Failure to comply with the Remote Gaming Duty regulations may result in significant fines and penalties, as well as reputational damage to the operator's business. A penalty can be contested by sending an appeal to HMRC.

Should Records Be Kept?

Record for Remote Gaming Duty must be kept for a minimum of 4 years.

Is VAT Applicable on Remote Gaming Duty?

Remote Gaming Duty is generally exempt from VAT.

For more information, please check Remote Gaming Duty in the UK.

Lottery Duty

Lottery Duty

What Is It?

Lottery Duty is a tax levied on organizers who offer a chance or ticket in a lottery promoted in the UK that has not been specifically exempted. Please note that most legal lotteries are exempted from the duty except the National Lottery.

A lottery that is subject to Lottery Duty is called a chargeable lottery. All unlawful lotteries are considered chargeable lotteries. The Duty is levied on the ticket or entry on the full payable or paid price for commissions and discounts prior to deducting the expenses.

Any license holder for the National Lottery or a person running a lottery that has not been exempted must register to pay Lottery Duty.

What Is the Current Rate of Lottery Duty?

The current rate of Lottery Duty in the UK is 12% of the following:

  • The total stake amount paid during an accounting period
  • The total stake amount payable on tickets or chances taken during the accounting period

How Should an Operator Pay Lottery Duty?

Registrants must send the completed application form BD601 to HMRC at least 15 days prior to promoting a chargeable lottery. Upon receiving it, HMRC notifies the registrants about when the return is due.

The HMRC must be intimated about any change in the registration details in writing, including the following:

  • Addition of a new promoter
  • Addition of a new address
  • Change of registered address
  • Cease of trade

Returns must be sent online using form BD600, which quotes the registrant’s 15-digit reference number. A single return can be sent for all chargeable lotteries promoted during an accounting period.

The return must reach HMRC by the 13th day from the last date of a registrant’s accounting period. Even if the registrant has not made any business during an accounting period, the return must be sent unfailingly.

What Are the Penalties?

Penalties are charged for…

  • Failing to apply for registration before promoting chargeable lotteries
  • Failing to notify HMRC about business changes on time
  • Inaccuracy in return or tax document
  • Not paying adequate Lottery Duty
  • Failing to inform HMRC about a low duty assessment

Lottery organizers and promoters who disagree with a penalty charged can appeal to HMRC to contest the same.

Should Records Be Kept?

Lottery Duty payers must maintain records to calculate the duty they owe and allow HMRC to check the same. Currently, there is no law on how record-keeping should be done.

Is VAT Applicable on Lottery Duty?

Lotteries being a game of chance is normally exempted from VAT.

For more information, please check Lottery Duty in the UK.

General Betting Duty

General Betting Duty

What Is It?

General Betting Duty is a tax on the profits of bookmakers who offer the following:

  • General or pool bets on horse racing regardless of the bettor’s location, but with the bookmaker operating within the UK
  • General or pool bets on dog racing regardless of the bettor’s location, but with the bookmaker operating within the UK
  • General or pool bets on horse racing regardless of the bookmaker’s location, but with the bettor placing bets within the UK
  • General or pool bets on dog racing regardless of the bookmaker’s location, but with the bettor placing bets within the UK
  • Spread bets regardless of the bettor’s location, but with the bookmaker operating within the UK
  • Bets placed through betting exchanges regardless of the location of the betting exchange, but with the bettor being a UK person

Exempted from paying the General Betting Duty and informing HMRC about the business are operators who take on-course bets as follows:

  • At horse or dog races where the bettor (not agent), as well as the taxable bookmaker, or Tote operator, are present
  • From UK bookmakers who make hedge bets with the taxable bookmaker, with the former being absent from the races, but the latter being present.

Such bookmakers, however, must register and pay General Betting Duty on any off-course bet they take on horse races and other sports or events. The list includes bets taken as follows:

  • Over the telephone
  • On behalf of another person absent from the races
  • Via betting exchanges

It’s important to note that bets laid through betting exchanges are considered off-course even if the bookmaker is on-course. Do not mistake this for bets hedged through betting exchanges, which are duty-free.

What Is the Current Rate of General Betting Duty?

The current rate of General Betting Duty is as follows:

  • 3% on the gross profits from bookmaking for financial spread bets
  • 10% on the gross profits from bookmaking for all spread bets
  • 15% on the gross profits from bookmaking for fixed odds and totalisator bets on horse or dog races
  • 15% of the commission charged by betting exchanges to UK users

How Should an Operator Pay General Betting Duty?

To pay General Betting Duty, an operator must first register at least 31 days prior to starting the business, unless it is based in:

  • The UK
  • The EU
  • Gibraltar
  • The Isle of Man
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa

Businesses based in the above countries must register at least 14 days prior to starting operations. Registration can be done online or by post by writing to HMRC National Registration Unit and seeking this registration form: GBD1 General Betting Duty – Application to register a business for GBD.

Businesses that aren’t in a group must appoint an HMRC-approved representation in the United Kingdom unless they are based in:

  • The EU
  • The UK (excluding the Channel Islands)
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa
  • In Gibraltar and the Isle of Man – jurisdictions in agreement with the UK to enforce gambling tax

If a representative is appointed or your business has a history of poor compliance with the gambling tax obligations, HMRC might ask for 6 months of estimated duty liability as security money, which can be paid:

  • As a cash deposit
  • As a bank guarantee
  • As a performance bond
  • By setting up a joint account with HMRC

In case of any change or mistake in the registration form, the bookmaker must inform HMRC within a month from the date of registration or change, whichever is later. The list of changes includes the following:

  • Business type
  • Name or address
  • Opening or closing of business
  • Cease of trade
  • Agent addition
  • Registration for another tax
  • Change in return accounting period
  • De-registration

Please note that deregistration should be intimated 14 days prior to its implementation.

Returns and payments should be filed online or in paper within 30 days from the end of the accounting period, which is 3 calendar months for General Betting Duty.

If the 30th day is a Saturday, Sunday or bank holiday, the previous working day shall be considered the last date. Furthermore, a return must be filed even if the bookmakers need not pay any tax.

What Are the Penalties?

Penalties are charged for…

  • Failing to inform HMRC about business changes on time
  • Failing to send return and payment on time
  • Inaccuracy in return or tax document
  • Not paying adequate General Betting Duty
  • Failing to inform HMRC about a low duty assessment

Bookmakers who disagree with a penalty can contest it by sending an appeal to HMRC.

Should Records Be Kept?

Record for General Betting Duty should be kept for a minimum of 4 years.

Is VAT Applicable on General Betting Duty?

General Betting Duty is generally exempt from VAT.

For more information, please check General Betting Duty in the UK.

Pool Betting Duty

Pool Betting Duty

What Is It?

Pool Betting Duty is a tax on the profits of bookmakers who offer pool bets without fixed odds on betting activities that are not horse racing or dog racing. For a bookmaker to be liable to pay Pool Betting Duty, the customer should be:

  • Present in a UK betting shop regardless of their address of residence
  • A UK person regardless of the physical location of the bookmaker

As already mentioned, pool bets on horse or dog racing would attract General Betting Duty instead of Pool Betting Duty.

What Is the Current Rate of Pool Betting Duty?

The current rate of Pool Betting Duty is 15% on net pool betting receipts from dutiable pool bets calculated within an accounting period. Net pool betting receipts may be calculated as stakes received minus winnings paid out.

How Should an Operator Pay Pool Betting Duty?

A bookmaker required to pay Pool Betting Duty, must register the business at least 31 days before starting the services unless it is based in the following countries:

  • The UK
  • The EU
  • Gibraltar
  • The Isle of Man
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa

For the above countries, the window is 14 days prior to starting business operations. Registration for the taxes can be done online or by post. In the latter case, the bookmaker must write to HMRC National Registration Unit and get this registration form: PBD1 Pool Betting Duty – Application to register a business for PBD.

HMRC-approved representatives can be appointed by businesses that don’t operate in groups unless they are based in the following countries:

  • The EU
  • The UK (excluding the Channel Islands)
  • Norway
  • The Faroes
  • Iceland
  • New Zealand
  • South Africa
  • In Gibraltar and the Isle of Man – jurisdictions in agreement with the UK to enforce gambling tax

Pool Betting Duty payers are liable to pay 6 months of estimated duty as security to HMRC upon order if their representatives have a demonstrated history of incompliance with tax obligations. This amount can be paid as:

  • A cash deposit
  • A bank guarantee
  • A performance bond
  • Or by opening a joint account with HMRC

The following mistakes or changes in registration details must be informed to HMRC within a month’s time from the date of registration or change, whichever is later.

  • Business type
  • Name or address
  • Opening or closing of business
  • Cease of trade
  • Agent addition
  • Registration for another tax
  • Change in return accounting period
  • De-registration (to be notified 14 days before implementation)

Bookmakers paying Pool Betting Duty must send returns and payments within 30 days from the end of the accounting period either online or on paper. For Pool Betting Duty, the accounting period is 3 calendar months.

If the 30th day happens to be a Saturday, Sunday or bank holiday, the earlier working day is considered the last date for sending returns and payments, which must be done even if the bookmaker has not made any business during this period.

What Are the Penalties?

Penalties may be charged for…

  • Not informing HMRC about business changes on time
  • Not sending returns and payments on time
  • Inaccuracy in return or tax document
  • Not paying adequate General Betting Duty
  • Not informing HMRC about a low duty assessment

Bookmakers who want to contest a penalty can do so by sending an appeal to HMRC.

Should Records Be Kept?

Record for Pool Betting Duty must be kept for at least 4 years.

Is VAT Applicable on Pool Betting Duty?

Pool Betting Duty is generally exempt from VAT.

For more information, please check Pool Betting Duty in the UK.

Machine Games Duty

Machine Games Duty

What Is It?

Machine Games Duty is a tax on the profit of operators who offer gaming machines such as slot, fruit or quiz machines on their premises that reward players with cash prizes.

The following are exempted:

  • Gaming machines where the cost-to-play exceeds the prize
  • Takings from charity events, tournaments or lottery machines
  • Domestic gaming machines

What Is the Current Rate of Machine Games Duty?

The current rate of Machine Games Duty is as follows:

  • 5% on the gross profits from dutiable machine games where the maximum cost of play doesn’t exceed 20p and the maximum prize doesn’t exceed £10
  • 20% on the gross profits from dutiable machine games that aren’t Type 1 and in which the cost to play doesn’t exceed £5
  • 25% on the gross profits from dutiable machine games where the maximum cost of play doesn’t exceed £5

How Should an Operator Pay Machine Games Duty?

Any operator who holds any of the following licenses for their own premises is liable to register, report and pay Machine Games Duty:

  • A licence for gambling or selling alcohol
  • A family entertainment centre gaming machine permit
  • A club premises certificate
  • A club gaming or machine permit
  • A prize gaming permit or amusement permit
  • A club registration certificate
  • A bookmaking office licence
  • A Bingo club licence

However, if an individual is a license holder of any of the above as well as a landlord on whose premises a tenant runs a machine gaming facility, the latter is liable to pay the Duty. For unlicensed premises, the manager or owner must register for Machine Games Duty. Suppliers of the machines are not liable to pay any such tax.

An operator offering machine games in the UK must register for Machine Games Duty at least 14 days prior to making his services available. Such operators must have an HMRC business tax account for registration.

Owed Duty must be paid within 30 days of sending a return. If an operator stops offering machine games, their registration must be immediately cancelled to avoid receiving requests for returns and payments from the HMRC based on the amount owed, which is calculated via central assessments.

What Are the Penalties?

Penalties may be charged for failing to register for Machine Games Duty on time.

Should Records Be Kept?

Operators who are liable to pay Machine Games Duty must keep records of the profits made from their machine games as well as the returns for 4 years.

Is VAT Applicable on Machine Games Duty?

Profits made from machine games are exempt from VAT if Machine Games Duty is paid.

For more information, please check Machine Games Duty in the UK.

Double Taxation Relief for Gambling Businesses: How Does It Work?

UK-based gambling businesses that offer remote gambling services to overseas players can get a Double Taxation Relief (DTR) on the following Gambling Duties:

  • General Betting Duty
  • Pool Betting Duty
  • Remote Gaming Duty

The purpose is to ensure UK operators do not end up paying double taxes and hence, contemplate moving abroad. This helps the government retain tax revenue as well as employment within the UK.

What Are the Implications of Gambling Taxes?

Gambling taxes have significant implications for both the gambling industry and its stakeholders.

One of the primary impacts of taxes on the gambling industry is the level of competition among operators. Higher tax rates can make it more difficult for smaller operators to compete with larger ones, who may have more resources to absorb the impact of taxes.

Additionally, taxes can also affect the quality and variety of gambling services offered by operators. Higher tax rates may decrease profitability and force operators to cut costs, which could result in a reduction in the quality of services offered or a reduction in the variety of gambling options available.

Do not think that players aren’t impacted by gambling taxes. If taxes are too high, operators may pass on the cost to the players in the form of reduced chances of winning via lower RTP in slot machines or higher profit margins on sports bets. This could make it less affordable for some players to participate in gambling activities.

In short, the level of taxes imposed on the gambling industry can have a significant impact on the industry's growth, the quality of services offered, and the overall experience of players.

FAQ

Is Gambling Entirely Tax-Free in the UK?

Gambling is not entirely tax-free in the UK, but rather, subject to specific tax rules and regulations. While individual gamblers may not be required to pay tax on their winnings, the gambling industry as a whole is subject to various taxes and levies.

Is Income Generated From Gambling Winnings Taxable?

Yes, any income generated from gambling winnings is taxable in the UK. For instance, if you buy a house with your gambling winnings and put it out on rent, your rental income will be taxed at a rate of 0% to 45% depending on the amount.

Similarly, if you invest the money you win in shares, you would have to pay a Capital Gains Tax at either 10%, 18%, 20% or 28% depending on your total taxable income. So, if you gamble and happen to win big, don’t forget to consult a tax advisor on how to best invest your money and pay minimum tax.

Do Lottery Winnings Deposited to the Winner’s Bank Account Attract Tax?

Lottery winnings deposited to the winner’s bank account remain tax-free. However, the interest earned from the funds would be subject to Income Tax.

Do Lottery Winnings Gifted to Someone Else Attract Tax?

Lottery winnings gifted to someone else would attract an Inheritance Tax of 40% if the amount exceeds the £325,000 threshold. However, you can avoid this by offering the gift in the following ways:

– More than 7 years before you die
– To your spouse or civil partner
– Within the £3,000 annual allowance limit
– Up to £250 per tax year
– During weddings

If the person giving the gift dies within 7 years, the recipient would still be liable to pay the Inheritance Tax. HMRC calculates this amount using a ‘sliding scale’ as follows:

– Death within 0 to 3 years – 40% Inheritance Tax
– Death within 3 to 4 years – 32% Inheritance Tax
– Death within 4 to 5 years – 24% Inheritance Tax
– Death within 5 to 6 years – 16% Inheritance Tax
– Death within 6 to 7 years – 8% Inheritance Tax
– Death within 7+ years – 0% Inheritance Tax

Also, note that the £3,000 annual allowances of one tax year can be carried over to the next, with the maximum allowance being £6,000. Furthermore, a gift of £250 per tax year would not attract Inheritance Tax as long as the recipient hasn’t received any gift from the payer’s £3,000 allowance.

Moreover, wedding gifts are tax-free provided:

– They are given before the wedding takes place.
– There’s proof the marriage went ahead.
– The gift is up to £5,000 for a child.
– The gift is up to £2,500 for a grandchild or great-grandchild.
– The gift is up to £1,000 for anyone else.

Why Aren’t Gambling Winnings Taxed in the UK?

Gambling winnings aren’t taxed in the UK because if it were, it would warrant the establishment of a system of credits or allowances for betting losses, which might be difficult to monitor. This could easily become a nightmare because more often than not, gamblers lose.

Also, the winnings of some people would be entirely offset by the losses of others given the nature of the activity. As betting is not at all a zero-sum game, the credits and allowances for losses would be higher than any revenue gained from the winners, leading to revenue losses rather than gains.

What Is a Gambling Tax Form?

A Gambling Tax Form is a registration form meant for casino operators, lottery organisers and bookmakers to fill in and submit to HMRC for the purpose of paying relevant duties on their profits and sending returns.

What Is Gambling Tax Revenue?

In the UK, Gambling Tax Revenue refers to the money that the government collects from gambling operators in the form of various taxes depending on the nature of the services offered. The revenue generated from these taxes is used to fund public services and initiatives, such as healthcare, education, and infrastructure projects.

Is Tax Deducted at Source for Betting in the UK?

Tax on winnings from betting is generally not deducted at source in the UK. Bettors get to keep the full amount they win.

Do Inherited Gambling Winnings Attract Tax?

If your gambling winnings are inherited, an Inheritance Tax of 40% may be imposed upon your death on the heir if the amount exceeds the Inheritance Tax Allowance threshold of £325,000 threshold. Also, any income generated from this money will be taxed.

Please note that lottery winnings are considered part of the winner’s estate and hence, the heir is obliged to pay Inheritance Tax on it if it exceeds the threshold.

With extensive experience in the professional iGaming industry since 2015 and thousands of casino articles and reviews under his belt, Mattias is a seasoned expert well-versed in the world of online casino gambling.
 
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