MGD levels set in Budget


The Chancellor George Osborne has announced in today’s Budget that Machine Games Duty will be set at 20% at the higher level and 5% for machines with lower prizes.

The lower rate will apply to machines with maximum stakes of 10 pence and maximum cash prizes of £8.  There is no ability to net off irrecoverable VAT and SWPs have been included.

The 20% will be a blow to the industry as it is significantly higher than the 15% that BACTA had asked for. But the biggest blow will of course be the VAT which has been removed and which can now not be reclaimed on the purchase of new machines. “This has effectively added 20 per cent onto the cost of buying new machines,” said an industry source who added, “the fact that Category C machines were not given a rate somewhere inbetween 5 and 20 per cent shows that the Government does not understand our industry or has chosen not to.”

Despite being in a much better position to cushion the blow, the LBO sector will also be knocked by the announcement. Both William Hill and Ladbrokes went on record to say their break-even rate for MGD was 16-17 per cent, although the City was predicting a slightly higher rate of 22%.

In addition to the MGD announcement the Government also announced that it will move to taxing remote gambling on a place of consumption basis. A consultation on design characteristics of the new regime will follow in due course.

It is proposed that the current 15% rate that applies to remote gambling will be maintained, and that the reform will be implemented on 1 December 2014. However, both the rates and the exact implementation date will be kept under review. The legislation will be passed in a future Finance Bill.

As announced in December 2011, the Government will also introduce double taxation relief for general betting duty, remote gaming duty and pool betting duty for accounting periods ending on or after 1 April 2012. The legislation will be passed in Finance Bill 2012.

Key links

The key Budget documents can be accessed at the following links:

The main Budget document:

An Overview of Tax Legislation and Rates:

Policy costings document (for MGD and remote gambling):


The 2012 Finance Bill will be published on 29 March.



Comments (1)

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At the moment I am paying both vat and license duty which is nearly 40% or turnover at my AGC this way I am not restricted on the amount of cat c machines and am paying 20%
At my FEC I am paying standard rate of vat which will fall to 5%
I know we cannot claim vat back on purchases but I still feel I will benefit as a whole

24/03/2012, 21:52

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