UK Industry Group Warns Of Stealth Online Tax Increase

November 28, 2023
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The UK gambling industry’s largest trade group has reacted with dismay to news that the government is considering hiking taxes on online betting.
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The UK gambling industry’s largest trade group has reacted with dismay to news that the government is considering hiking taxes on online betting.

Buried deep within chancellor Jeremy Hunt’s Autumn Statement was a commitment to review UK gambling taxes, with a view to “rationalising” them.

Online casino gaming is subject to the remote gaming duty, which is set at 21 percent of profits. General betting and pool betting duty are, however, charged at the lower rate of 15 percent, having avoided an uplift in 2019 when the remote rate was increased.

“The government will consult shortly on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through a three-tax structure,” reads the chancellor’s statement.

The Betting and Gaming Council (BGC) said fears the government is planning to increase taxes by stealth, which would pose a particular threat to the racing industry.

“Any further new tax rises could be a hammer blow for horseracing’s finances, which are already threatened thanks to measures proposed by the government in the recent white paper,” said BGC chief executive Michael Dugher.

Horseracing interests are in the midst of a bitter war of words with the government over planned affordability checks.

Plans to force operators to conduct financial risk assessments on players will drive them to the black market, said the pro-racing camp, despite ministers’ assurances that checks will be “frictionless”.

“[Horseracing] is a sport which relies heavily on betting operators for its success and yet the government appears determined to draft in measures which shrink the industry with huge ramifications for other sectors,” added Dugher.
 
The BGC chief executive, a former Labour MP, also alleges that the Treasury announced its plans without consulting the Department of Digital, Culture, Media & Sport (DCMS) on the impact of the changes.

The government has said it will consult on rationalising the tax rates and makes no specific proposals in the budget document.

Dugher complained that the consultation will be “nothing more than a Trojan Horse to further raise taxes on businesses”.

Other seasoned observers of UK gambling policy also think there is reason to believe the government will simply align gambling taxes at 21 percent of revenue.

Analysts at Regulus Partners said they expected the government to make an “opportunistic” increase to general betting duty (GBD) to bring it in line with the remote gaming tax rate. 

“Increasing GBD to 21 percent would put all online gambling at the same headline rate, which reduces fiscal distortion … and creates a headline tax rate on revenue of c. 24 percent once tax on bonuses is factored in. A 24 percent effective rate is within (recently increased) European norms,” they said.

Gambling tax rates in the Netherlands are around 30 percent of gross gaming revenue (GGR), while Denmark charges a rate of 28 percent. In Sweden, the government recently announced its intention to increase the existing 18 percent rate to 22 percent from 2024.

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