UK government proposes single tax rate for remote gambling

The UK government has introduced a forward-thinking tax framework for remote gambling, proposing the elimination of the existing three-banded tax rate system.

In an effort to streamline taxation, the government is seeking input from industry stakeholders on the potential consolidation of these three separate remote gambling tax rates.

HM Revenue & Customs (HMRC) and the Treasury have put forth a proposal for a singular tax applicable to all remote gambling activities, termed the Remote Betting & Gaming Duty (RBGD).

The government aims to engage various industry players for their insights on the proposed RBGD, ensuring that reforms align with sector objectives and reduce administrative burdens for all involved parties.

Current Gambling Tax Rates Misaligned with Consumer Behavior

The current tax framework in the UK comprises three distinct rates: Remote Gaming Duty (RGD), General Betting Duty (GBD), and Pool Betting Duty (PBD).

James Murray, Exchequer Secretary to the Treasury, emphasized in the proposal document: “The tax system must adapt to the rapid developments and innovations that have fundamentally transformed the UK-facing remote gambling sector.”

Since its inception, remote gambling has witnessed exponential growth, underscoring the need for a tax structure that reflects the industry’s evolving dynamics.

Currently, remote gambling activities are subject to different tax rates: RGD is levied at 21% on operator profits, whereas GBD and PBD are both taxed at 15%—one based on profits and the other on net stake receipts, respectively.

The consultation phase for the RBGD will span 12 weeks, concluding on July 21. Final plans are anticipated to be unveiled during the Autumn Budget of 2025.

Weak Justification for Maintaining the Current Three-Tax System

HMRC and the Treasury have conducted a comprehensive review of the existing tax structure, focusing on its objectives, such as minimizing player harm. They concluded that there is now “no strong rationale” for maintaining the separate tax designations.

The consultation process invites feedback from industry experts regarding the optimal framework for the new tax system, including recommendations for the activities it should encompass and potential sanctions for non-compliance. Consideration is also being given to the treatment of free-play bonuses, free bets, and prizes.

As Murray elucidated, “Gross gambling yield for remote gambling now stands at £6.9 billion annually, reflecting 200% growth over the last decade and a 20% increase in the past five years.”

Hints of a New Gambling Tax System in the 2024 Autumn Budget

Leading up to the government’s Autumn Budget last year, speculation surged regarding potential heavy-handed reforms in the gambling sector, suggesting a possible 50% increase in remote gambling taxes.

This media frenzy significantly affected the industry, causing a decline in gambling stocks in response to the looming threat. However, shortly thereafter, it was clarified that the Autumn Budget would not include a tax rate increase.

Nonetheless, budget documents indicated that the government would explore ways to consolidate the UK’s gambling tax structure.

The budget papers stated, “Next year, the government will consult on proposals to unify remote gambling—covering activities conducted via the internet, telephone, television, and radio—into a single tax framework. This initiative aims to simplify, future-proof, and address existing loopholes within the system.”