SBC News HMRC provides more detail on freeplay taxation changes

HMRC provides more detail on freeplay taxation changes

HMRC

The UK tax authority HMRC has declared that it intends to implement new regulations relating to industry free bets, bonuses and ‘discounted’ gaming.

Updating the industry, HMRC detailed that the government would proceed with a ‘slightly revised option’ of its initial proposals in its incoming 2017 ‘Finance Bill’ in which it aims to reduce stakeholder burdens, whilst still achieving its ‘original aim of levelling the playing field’.

HMRC’s original consultation launched this summer addressed the idea of amending the definition of ‘free bets’ and ‘prizes’, as the authority wants operators to account for duty on discounted wagers placed by UK consumers. HMRC further states that gambling operators will not be able to hide taxable duty through ‘freeplays’ and free bets awarded as prizes or marketing costs for customers.

HMRC explained the rationale behind the changes: “This will ensure where a customer makes use of an offer that allows them to gamble for free, or at a reduced rate, the operator will, in certain circumstances, be required to account for duty on the amount that the consumer would have paid without the offer.

“The definition of ‘prizes’ will also be amended to ensure that operators cannot use the value of freeplays given as prizes to reduce their dutiable profit. These changes will have effect for accounting periods that begin on or after 1 August 2017.”

The UK government aims to add these amendments for the accounting periods beginning 1 August 2017, with all UK licensed gambling operators set to comply with the new regulations regardless of product or vertical.

In its document, the authority details that the new regulations could help generate an additional £45 million in tax revenue during the 2017-18 financial year, with a target of £110 million by 2020-21.

“This measure is intended to bring the tax treatment of freeplays for remote gaming more into line with the treatment for free bets under GBD,” HMRC detailed in its industry statement. “The costing includes a behavioural effect to account for a change in the marketing strategy of affected operators as well as the potential for firms finding ways to mitigate the impacts of the measure.

“The impact on individuals and households in the UK is expected to be negligible as this measure is not expected to have a significant impact on the availability, price and payouts of remote gambling.”

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