UK gambling tax will go up to 21%, posing new difficulties for the industry in the country. The measures are coming into effect in October, 2019
New Tax Challenges for the UK Gambling Industry
On Monday,October 29, the UK Treasury convened to decide on a number of issues regarding the future budget. Chancellor Phillip Hammond was among the attendees who delivered a set of proposed measures that affect the gambling industry specifically.
During his budget speech, Mr. Hammond noted that there would be a rise in the Remote Gambling Duty (RGD), which will target all iGaming operators offering anything from video slots, and their variations, to blackjack and poker.
This move is planned as a specific way to offset any losses in tax revenue that may ensue from the fact that businesses operating fixed-odds betting terminals (FOBTs) have been asked to reduce the maximum stake from £100 to £2, which may have a significant impact on how much income gambling operators register once the measure comes into effect.
The rate was increased to 21% from the current 15% levels. The government estimated that by revving up the tax rate, the coffers will get additional $166 million in the next two years, and this number will go significantly up in the two years after, with the raked-in tax going up to $326 million.
Despite the new changes, though, there has been no exact time frame as to when FOBTs’ £2 regulation will trigger whereas the new tax hike is arriving in October 2019.This lack of consistency has worried business representatives who have been eager to get exact date so that they may prepare fully for the upcoming regulatory changes.
The Remote Gambling Association Advises Caution
While the debate still raged, one body, to name the Remote Gambling Association (RGA), made significant efforts to caution the government against any rushed-up decisions to bring the tax rate too high.
The RGA pointed out that anything beyond the 20-per-cent-threshold would squeeze businesses to the point that they may need to start cutting jobs, which in turn, may lead to the Treasury losing tax money.
The UK is a mature market now. The increase in regulation and tax burden are making it less attractive. – RGA Executive Clive Hawkswood
According to RGA chief executive Clive Hawkswood, the UK market has reached maturity, which naturally means that legal and regulatory measures will be toughening up and readily squeezing established companies for extra pennies, while putting a life-threatening pressure on smaller operators.
As the information we now have stands, the changes to FOBTs may also come into effect in October, 2019 to coincide with the mulled changes in the tax law. This gives businesses one year to fully prepare for the oncoming spate of regulatory changes.
These changes may affect certain businesses in an unpredictable way. For instance, now GVC-owned Ladbrokes may have to reconsider how it pays to shareholders from FOBTs in light of the new regulation.
There are many unknowns further down the road that will need answering and while business prepares to meet regulation, new challenges rise on the road ahead.