As we all know, there are two things that are certain in life—death and taxes! But at the moment in the UK, gambling taxes are looking a little less certain. Currently, providers fall into categories called duties, which determine how much they pay in tax. It’s a pretty lucrative system for the Government, with the gambling industry paying a staggering £3.6 billion in tax in 2024.¹
However, it seems changes to the current tax structure are approaching on the horizon, so could we see that change? And how could the way that online providers are taxed change? Let’s learn all about the current and potential upcoming tax rules in the UK.
Paying Up—the Different Gambling Duties in the UK
There are three different gambling duty categories that online providers in the UK fall into, remote gaming duty, general betting duty, or pool betting duty. It can be a bit difficult for providers to know which category they fall under, especially if they host multiple forms of gambling. How exactly does it work? Well, let’s take a closer look.
The Remote Gaming Duty
The first category we’ll look at is the remote gaming duty. As the industry moves further into the online world, this duty helps ensure online providers pay their fair share of taxes. It’s applicable to any providers who operate online gambling in any form, whether it’s live poker, interactive slots, classic blackjack, or sports betting.²
The rate of the remote gaming duty has been set at 21% of profits since April 2019. It also means that providers have to verify the location of their players to ensure they’re paying the right level of tax. That’s one of the reasons you’ll be asked to provide some form of ID and proof of address when signing up to a UK licensed provider.
General Betting Duty
Next up is the general betting duty, which is set at the lower level of 15% of the provider’s profit. General betting duty is paid for all UK players, regardless of whether the provider themselves is based in the UK. All of that might sound pretty straightforward, but the general betting duty can actually get pretty complicated.
The 15% duty applies to general or pool betting made in the UK or by a UK citizen on horse racing or dog racing. There’s a lower 10% duty for sports spread bets, which are those that bet on the winning margin in a sport event, made at a UK provider. An even lower 3% duty applies for financial spread bets, a bet on the future of a financial market.³ You can see why things get a bit confusing!
Pool Betting Duty
If you’re wondering what happens to bets that aren’t on horse or dog racing, they’re liable to pool betting duty, a flat rate duty of 15%. This duty is for any sports bets on anything that isn’t horse or dog racing, and all sports bets that are not fixed odds. For remote providers, it doesn’t matter where they’re based, only where their customers are. That can, once again, make calculating tax quite a challenge.
Three Become One? Potential Tax Changes
Confusion over the different levels of duty and what distinguishes each has led to calls for reform from providers and legislators alike. The idea of a streamlined tax structure is big news at the moment. It would see the three different levels combined into one flat rate across all providers. However, the idea has received both strong backing and opposition.
Backing Tax Reform
There’s been a lot of praise for the idea of a simplified betting tax system. It could help to make the system fairer, ensuring all providers pay the correct amount of tax. There’s no doubt it would make what can be a confusing and complicated system much more efficient.
The general public are supportive of higher levels of tax in the industry, with more than half of the population backing an increase. Research groups, such as the Social Market Foundation and the Institute for Public Policy Research, have also been vocally behind alterations to the system. They’ve even suggested that it could generate an additional £3 billion in taxes.⁴
Opposing Tax Reform
However, there has also been strong opposition from many in the industry. One of the most notable voices of opposition has been the Betting and Gaming Council, the standards body for gambling in the UK. They emphasise that a declining sports betting industry would find it hard to pay the same rate of tax as flourishing online casinos.
The last few years have certainly been a tough time for the betting industry in the UK. Land-based operators have been decreasing in numbers for ten consecutive reporting periods. That represents a decrease in premise numbers of 17.8% from before the COVID-19 pandemic.⁵ Taxing these struggling providers at the same rate as online casinos would result in more closures and the loss of jobs.
Did You Know Players Used to Pay Taxes on Winnings in the UK?
While the current rules mean that UK players don’t have to pay taxes on what they win when gambling, that hasn’t always been the case. It’s also not the case in other countries, with players having to fork out anywhere from 1 to 25% of their winnings in countries including France and the United States.
The History of Gambling Tax in the UK
The 1960 Betting and Gambling Act was the first to legalise gambling in the UK. It also introduced a 9% tax on both winnings and stakes. It was a heavy financial burden for players, and many felt it limited the growth of the industry. Regulatory bodies also found it difficult to determine whether providers were paying the correct amount of tax using this method.
It wasn’t until Gordon Brown overturned the tax in the 2003 Budget that the burden was shifted from punters to providers. The revised gambling tax began as a blanket 15% charge for all UK-based operators. That meant that many operators simply shifted their setup overseas to avoid paying tax. In 2014, the Gambling Act was amended so tax was determined by UK players, rather than a UK base.
An Unfortunate Loophole—Tax on Crypto Gambling
There is one form of gambling where UK players potentially have to pay tax on their winnings, and that’s stakes that use cryptocurrency. Cryptocurrencies, like Bitcoin and Ethereum, have become popular payment options with gamblers thanks to their lower fees and faster transaction speeds.
However, in the UK, all cryptocurrency transactions are subject to capital gains or income tax. That means crypto gambling falls under a different category than gambling using card payments or bank transfers. As a result, players can find themselves having to pay between 18 and 24% in tax on any winnings above the cap of £3,000.
What are the Current Gambling Tax Rules in the UK and Could They Change in the Future?
At the moment, gambling tax in the UK is the responsibility of the provider, rather than the player. That’s pretty unlikely to change in the near future. One thing we could see change, though, is the way providers are taxed.
Currently, gambling tax is broken into different duties, which providers pay depending on what form of gambling they host. However, in the growing online gambling world where providers offer multiple forms, the divide between each category has become blurred. That’s prompted many to call for reform, which would see one set tax for all gambling products and providers in the UK.
However, given the current declining sports betting market, it’s unlikely we’ll see this happen in the next few years. It would be a real challenge for struggling sports betting providers to pay an elevated flat tax rate, and it could put even more out of business. So, while the current gambling tax rules in the UK might seem a bit confusing, they’re here to stay, at least for the foreseeable future.
³ General Betting Duty – Excise Notice 451a, Written by HM Revenue and Customs, Published by Gov.UK.
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