Point of consumption gambling tax explained

07 Dec 2014       By

As of the 1st December, new point of consumption gambling tax came into play for online casino sites. It changed the rules regarding Pool Betting Duty, General Betting Duty and Remote Gaming Duty. The question is how does this affect you, the player? Below you’ll discover an overview of the new tax law and how it affects not only the site, but the player’s experience too.

What are the new rules?

Before the new law was introduced, all gambling activities were taxed based upon ‘Place of Supply’. This basically meant online bingo sites that operated outside of the UK didn’t have to pay UK tax. Many sites hold a foreign license purely to avoid the higher tax in the UK. However, now remote companies will also need to have a UK license if they have UK consumers using their services.

The new rules change from ‘Place of Supply’ to ‘Point of Consumption’. Companies will now be liable to pay at least one of the three taxes. On the other hand, UK companies that supply gambling services to those in other countries will now no longer need to pay the taxes for the foreign transactions.

General Betting Duty

The new General Betting Duty law will see companies charged on the profits they make from general, pool, dog and horse racing UK bets, regardless of where the company is based. It will also apply to spread bets that are made in UK betting stores.

Pool Betting Duty

Changes to Pool Betting Duty means tax will be charged on non-dog or horse fixed-odds bets when the customer is betting in the UK. It is also interesting to see that tax will be charged on bets made by UK customers who are currently living abroad. It is worth noting that General Betting Duty could also be charged on these bets.

Remote Gaming Duty

The Remote Gaming Duty is the main change that will affect online gambling sites. It charges the company tax on UK customer’s profits; regardless of where the actual company is based.

Determining UK Customers

The changes will make it more difficult for online bingo sites to determine their profits. They will need to gather data from their customers to figure out which ones are actually living within the UK. The HMRC has provided a definition of a UK person as:

  • A person who usually lives within the UK
  • A corporate body that is legally constituted in the UK

Many companies have challenged the new tax laws, with leading online sites such as Victor Chandler and 32Red making a stand. However, despite protests the 15% tax law has been introduced.

Overall, these changes affect the online bingo companies more than they do the consumer. However, the smaller gaming sites may not be able to afford the tax increase and many may find themselves needing to shut down their services. Bonuses could also be reduced as the higher the bonus, the more tax the company will be charged.