Gambling is popular in the UK, and like many other industries, it is subject to taxation. Whether you run a casino, offer online betting or operate a bingo hall, you need to understand Gambling Duty as to avoid penalties.
What is Gambling Duty?
Gambling Duty is a range taxes applied to different forms of gambling. The amount payable depends on the type of gambling service offered and also the profits generated. Hence, HMRC enforces these duties to ensure businesses contribute their fair share to public finances.
Types of Gambling Duty
Different gambling activities are subject to specific duties. Each one has its own rules and tax rates:
Gaming Duty
- Applies to casinos based on their gross gaming yield (stakes received minus winnings paid out and charges for gaming)
- Tax rates range from 15% to 50%, depending on profits
Remote Gaming Duty (RGD)
- Affects online gaming operators offering services to UK customers, including offshore businesses targeting UK players
- The tax rate is 21% of remote gaming profits
General Betting Duty (GBD)
- Covers profits from fixed-odds betting and totalisator bets on horse or dog races
- The tax rate is 15% on net stake receipts
- Spread bets are taxed differently: 3% for financial spread bets and 10% for other spread bets
Pool Betting Duty (PBD)
- Applies to betting pools, such as sports pools
- The tax rate is 15% of the promoter’s net pool betting receipt
Machine Games Duty (MGD)
- Levied on profits from gaming machines
- Rates vary based on the cost to play and the cash prize offered:
- 5% for machines with low stakes and prizes
- 20% for mid-range machines
- 25% for high-stakes machines
Bingo Duty
- Charged at 10% of bingo promotion profits
- Small small-scale bingo operations are exempt
Lottery Duty
- Applies to lotteries, except for the National Lottery which is exempt
- The tax rate is 12% of ticket sales
Who Needs to Register for Gambling Duty
Businesses involved with gambling must register with HMRC to pay the appropriate duties. This includes:
- Casinos with a license under the Gambling Act 2005
- Online gaming operators providing services to UK customers
- Bookmakers offering general or pool betting
- Operators of gaming machines
- Bingo halls and lottery promoters where applicable
Consequently, failure to register on time can result in penalties.
How to Register for Gambling Duty
To register, businesses must submit specific forms to HMRC at least 14 days before they start operating. However, the forms vary depending on the business structure:
- GD56 for sole traders, companies or unincorporated bodies
- GD57 for partnerships
- GD60 for businesses registering as a group
Filing Returns and Making Payments
Once registered, businesses must file tax returns and pay duties for each accounting period. Moreover, most gambling businesses follow a six-month accounting period, with tax returns and payments due within 1 month of the period ending.
Some examples of forms used for tax calculations include:
- GD95 which is used to calculate Gaming Duty
- BD510 which used for Bingo Duty returns
Payment can be made online, by bank transfer or by cheque. However, late payments can result in penalties and interest charges.
Penalties and Record Keeping
Failing to register, submit returns or pay the correct amount of duty can lead to fines and penalties. Businesses may also face penalties for:
- Filing inaccurate tax returns
- Failing to notify HMRC of duty assessments that are too low
- Not reporting business changes, such as change of address or cessation of trading
Businesses must also maintain records for at least 3 years (or 4 years for some taxes) to allow HMRC to audit their activities. These records include:
- Accounts and transaction records
- Tax return documentation
- Details of customer transactions and bets placed
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