The UK pre-budget report: good news at last?
Yesterday's pre-budget report contained no nasty surprises for egaming operators, says Stephen Hignett, a gambling and tax partner at law firm Olswang, but left plenty for you to be thinking about...
THIS YEAR’S PRE-BUDGET REPORT (PBR) brought no nasty surprises for gambling operators.
The big news was a 2% decrease in the rate of bingo duty (payable by bricks and mortar operators). However, the new 20% rate won’t come into force until a date to be announced in the Budget next Spring – at which time we’ll no doubt hear more about the new GPT for gaming machines (of which we heard nothing in the PBR).
If you are reading this on your laptop in the sunshine of Alderney, Gibraltar or Malta (I expect it’s raining on the Isle of Man), you’re probably feeling rather smug.
Not only are you safe from the prospect of a 52% top rate of personal income tax (the 2% being the new rate of National Insurance Contributions), but UK gambling duties, UK corporation tax and – depending which island you’re sitting on – EU VAT shouldn’t apply to your egaming business.
The Government’s attempts to entice egaming operators to relocate to the UK from 1 September 2007, when the Gambling Act 2005 was passed and it became lawful to operate a remote casino or poker operation from the UK, have clearly failed. Not only was the rate of remote gaming duty set far too high at 15%, but the Government also underestimated how unattractive the UK’s tax system is generally.
There are, however, things to be thinking about.
If your egaming business is based outside the UK but forms part of a wider UK group, then staying outside the scope of UK taxes can be a tricky balancing act, with different rules applicable to corporation tax, VAT and remote gaming duty.
Taking the latter as an example, your business will be subject to UK duty if ‘one piece of remote gambling equipment used in the provision of the [remote gaming] facilities is situated in the United Kingdom.’ That is quite a wide test, and one which Her Majesty’s Revenue and Customs (HMRC) is allegedly looking at more closely.
How the UK’s gambling policy may change in the future will always be relevant to UK-facing egaming businesses – especially now with the prospect of a new party in power and so much change taking place elsewhere in Europe. After the Labour Government’s failure to align regulatory and taxation policies for the gambling sector, would a Conservative Government make the same mistake?
In the meantime, however, enjoy the sunshine and spare a thought for those of us having to pay UK taxes.
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