HMRC amends tax regulations for free bets

7 December 2016

The UK’s tax authority is to implement new rules regarding free bets, freeplays and discounted betting.

Her Majesty’s Revenue and Customs (HMRC) said legislation will be included in the Finance Bill 2017 to ensure that when a customer places a bet for free, or at a reduced rate, the operator will then, in certain circumstances, be required to account for duty on the amount that the consumer would have paid had the offer not been in place.

HMRC also intends to amend the definition of ‘prizes’ to ensure operators cannot use the value of freeplays given as prizes to reduce dutiable profit.

The changes are due to come into effect from accounting periods that begin on or after August 1, 2017.

HMRC said that the regulation changes would help to generate an additional £45 million (€53.1 million/$56.9 million) in tax revenue during the 2017-18 financial year, with this figure to increase to £110 million by 2020-21.

The new regulations will apply to remote gambling operators liable to account for Remote Gaming Duty, which applies to gaming over the internet, telephone, by television, radio or other electronic communications.

In a statement confirming the changes, HMRC said: “This measure is intended to bring the tax treatment of freeplays for remote gaming more into line with the treatment for free bets under GBD.

“This will contribute to sustainable government finances by broadening the Gambling Tax base.

“This measure was announced at Budget 2016 and was the subject of a technical consultation which ran between August 9 and October 17, 2016.

“The costing includes a behavioural effect to account for a change in the marketing strategy of affected operators as well as the potential for firms finding ways to mitigate the impacts of the measure.

“The impact on individuals and households in the UK is expected to be negligible as this measure is not expected to have a significant impact on the availability, price and payouts of remote gambling.”

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