In 2019, the UK achieved a total gross gambling revenue of 14.3 billion pounds, with the industry growing by an average of 4% every year. Gambling establishments are completely legal in Britain, and the market is quite large, so this is an interesting and promising direction for businessmen. That is why the state’s income from casinos, including establishments from the list of casinos not on gamstop, is growing.
Gambling, including online, has been one of the growing branches of doing business in the last decade and is a profitable business. The turnover of the industry is growing, investing also brings significant profits. How does this affect the state economy as a whole?
Which offices are subject to British taxation?
Everything is clear with ground offices – are located on the territory of the UK, they are required to have registration and pay deductions to the budget. However, the digital segment of the industry is also interesting for the local tax service, since more than 8 billion pounds are involved in online casinos.
Since 2012, there has been a rule according to which the profit from remote gambling is subject to British tax if it was received on the territory of Britain. The rule of the place of consumption has been introduced – offices from the United Kingdom do not pay a percentage of foreign profits to the budget, but foreign casinos are obliged to deduct to the crown if they entertain its subjects or guests of the country.
Current taxes for 2020
Only the profits of online establishments are subject to taxation, and not all income from British users. There are a number of exceptions, in which even lost bets of a British player are not taxed – for example, bets on foreign (relative to Britain) sports and bets on spread in the United Kingdom are tax-free. However, the combination of bookmaking and online casinos leads to the fact that the provider is regarded as a potential payer of gambling tax.
The taxes listed below are not necessarily paid all together – each of them is tied to a specific area of activity and concerns only the profit received from this type of activity.
General Betting Tax (GBD)
This tax applies to bookmakers and refers to the profits received from British players based on the results of sports betting, with or without a pool. Even betting exchanges and activities related to the distribution of bets accepted by other bookmakers in the United Kingdom are subject to taxation.
The interest charged depends on what kind of rate is being taxed. A fixed coefficient and a totalizator, the most common among bettors, require the bookmaker to deduct 15% of the winnings to the budget. Spread bets are paid at a modest rate of 3%. The remaining rates, which cannot be attributed to the first two categories (for example, with a pool), assume taxation in the amount of 10%.
Pool Betting Tax (PBD)
This tax is already more specific – it concerns bookmakers, but not all of them. In order to fall under the PBD, you can not accept bets on dog racing and horse racing, but you need to accept bets on other sports without fixed coefficients, when the exact amount of winnings of an individual player depends on how many other lucky people were found who guessed a number of events in the ticket.
PBD is paid in two cases: either a British person makes a bet in an office in any jurisdiction of the world, or the player’s nationality does not matter at all if he personally bets in a British office.
The amount of deductions in all cases is 15% of the profit.
Remote Gambling Tax (RGD)
This obligation applies to online casinos and bookmakers operating via the Internet, without land-based representative offices or as an alternative to them. The principles of registration and reporting for such providers are discussed above – it remains to add that the tax rate on profits from all players spending money on games in Britain is 21%. The tax burden increased significantly in 2019 – before that, RGD was calculated at a rate of 15%.
The gaming market does not stop developing. Since the sector’s profit is expected to reach $525 billion by 2023, the industry’s growth is 4% on an annual basis. It is beneficial for both the state and business that the industry continues to develop further.
Thus, despite the fact that a huge way has been passed over the past two decades, apparently, there is still much to strive for. And with such a level of activity of the industry, there may be no limit to its development and achievements.