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Remote gaming duty: tax treatment of ‘freeplays’

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HMRC is consulting on an amendment to the treatment of discounted or free stakes (known as ‘freeplays’) for remote gaming duty (RGD) purposes, to bring it into line with the less generous treatment of similar free bets for general betting duty (GBD).

For GBD, only winnings in the form of money can be included in the bookmaker’s duty calculation. Any free bets given as part of a customer’s winnings, or credited to a customer’s account, are not a deductible expenditure for duty purposes.

‘Freeplays’ in remote gaming are not taxed in the same way as free bets in general betting. When calculating ‘stakes’ under the current legislation, the remote gaming provider only needs to include in their duty calculation ‘amounts that entitle customers to participate in the gaming, or amounts payable in connection with gaming’. In effect this means that a freeplay is not treated as a gaming payment, and is not included in the duty calculation.

The proposed amendment to the legislation will, from August 2017, change the definition of a ‘freeplay’ for the purposes of RGD to ‘participation by means of an offer that waives all or part of the customer’s payment’. Freeplays used in place of a gaming payment by a customer will be deemed to have a value for duty purposes. Freeplays that are given as a prize, or as part of a prize, will have a nil value for duty purposes.

The closing date for responses to the draft legislation is 17 October 2016. See http://bit.ly/2aL3cfz.

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