Machine Games Duty Implementation
Consultation description
A formal consultation on the taxation of gaming machines and whether to move to a gross profits tax was held in 2009. A summary of responses to that consultation was published in December 2010. ‘Taxation of gaming machines: consultation on gross profits tax’ (2009)
In December 2010 the Government also announced its intention to reform the taxation of gaming machines and introduce Machine Games Duty (MGD). This was reaffirmed at Budget 2011.
MGD will be charged on the net takings from the playing of dutiable machine games. These are games played on a machine where customers hope to win a cash prize worth more than they stake. Where MGD is payable, it will replace both Amusement Machine Licence Duty (AMLD) and VAT.
MGD rates were announced at Budget 2012. The standard rate will be 20 per cent, and the lower rate will be 5 per cent of net takings. Subject to legislation in Finance Bill 2012, implementation will follow on 1 February 2013.
The policy costings document published alongside the Budget outlines how the rates have been calculated.
On 29 May, the Government published a supplementary technical note describing the data and methodology used to calculate the standard and lower rates of MGD in greater detail.
The Government’s intention has been for the introduction of MGD to be revenue neutral for the Exchequer. The technical note shows how, based on a thorough analysis of all the available evidence, the rates have been set to achieve that aim.
Consultation
The consultation “Implementing a Machine Games Duty: consultation on policy design” ran from 24 May to 26 July 2011. The consultation received 32 substantive written responses from businesses, industry representative groups and other bodies. The Government is very grateful for respondents’ contributions to the consultation process.
- Implementing a machine games duty: consultation on policy design (PDF 551KB)
- Press notice: Government publishes consultation on machine games duty
Responses
On 6 December 2011, the Government published a summary of responses to the consultation, “Design of Machine Games Duty consultation: the Government response”. This document also includes the Government’s response to stakeholders’ comments and an outline of design characteristics of MGD.
Further technical consultation
On 6 December 2011, the Government published draft legislation for MGD for a technical consultation. The consultation ran until 10 February 2012.
Separately, the secondary legislation covering the administration of the duty has been published on HMRC’s website (external, opens in a new window).