Pre-Budget Report - Gambling taxes

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

This year's Pre-Budget Report brought no nasty surprises for gambling operators.

The big news (since the increase in VAT to 17.5% as from 1 January 2010 was expected), was a decrease in the rate of bingo duty, down 2% to 20%. Whilst good news on the face of it, this new 20% rate won't come into force until a date to be announced in the Budget next spring. So the Chancellor’s headline-grabbing comment (a clearly popular one, which got one of the biggest cheers from the Commons) will give no immediate relief for the struggling bingo industry which was hit with a 7% rise in bingo duty earlier in the year.

The other gambling-related news worthy of note is that there was no mention at all of the new tax on machines (i.e. the new "gross profits tax" ("GPT") which will replace the current combination of amusement machine licence duty and VAT).   As a result, one would assume that details of this new GPT will now be announced in the 2010 Budget, although the rate at which this will be introduced remains a moot point.   It is hoped that the Government now understands that it won't be able to impose a rate of GPT applicable to machines that is "neutral" to all operators, due to differences in related rates of input VAT recovery. Rank Group Plc's published view is that a GPT rate of 15% would result in its position remaining neutral whilst it has been suggested that a slightly higher rate might result in parity for bookmakers. 

Whether the announced 2% cut in bingo duty is a concession to the industry or whether it is to counterbalance the fact that the new GPT on machines will be set at a rate which is higher than 15% remains to be seen.

For further information please contact: Stephen Hignett