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New Tax Regime for Businesses Operating Gaming Machines

A new regime came into effect on 1 February 2013 whereby tax on machine games will be entirely linked to takings, rather than including a fixed fee element on all machines.

Machine Games Duty (MGD) replaces both Amusement Machine Licence Duty (AMLD) – an annual levy for making a gaming machine available for play – and standard-rate VAT on net takings. MGD will be charged where customers pay to play a game on a slot, quiz or other machine in the hope of winning a cash prize that is greater than the stake.

There are two rates of duty for MGD. These are:

  • a lower rate of five per cent – for machines where the maximum cost per game on that machine is 10 pence and the cash prize is £8 or less; and
  • a standard rate of 20 per cent – for all other machine games subject to MGD, including those offering several games subject to the duty, where one or more of the games would attract the standard rate.

Under the new system, businesses must keep certain records, including bank statements, takings records and relevant business correspondence.

Bookmakers, arcades, bingo halls, casinos, pubs and clubs and any other premises that operate such machines must apply for registration with HM Revenue & Customs (HMRC). Businesses that continue to operate machines after 1 February without having applied for registration could face a penalty.

Businesses affected by the change should apply to register with HMRC as soon as possible if they have not already done so. The quickest way is via HMRC’s MGD Online Registration Service.

For more information on Machine Games Duty, see the HMRC website.