Gaming Machine Tax: What You Need to Know

The gaming machine tax was introduced earlier this year to tax the income on gaming and quiz machines frequently found in sports club house and social, working men’s and political clubs. This tax has a few stipulations however:

This tax is applicable if:
If any of the prices that are available are cash, or includes cash at least one of the cash prizes is bigger than the smallest amount that’s paid to play the game.

This tax is not applicable if:
The machine is located at not-for-profit event, for example an event that’s held for charity on lottery machines which meet the rules for Category B3A lottery machines – takings from these machines will also be exempt from VAT in a tournament, which is a situation where players play against each other instead of playing against a machine and the winner gets a prize – for example, several players could compete against each other in a fruit machine tournament with the winner being the person to gain a matching line in the shortest time, or similar.

How Much Is the Tax?
There are two rates for the gaming machine tax, the lower rate at 5 per cent – the lower rate is for machines where the maximum cost per game on that machine (the ‘maximum stake’) is 10 pence, and the cash prize is £8.00 or less. There is also a standard rate at 20 per cent – the standard rate applies to any machine games that have prize that exceed these maximum costs and prizes.

As of 28 February, HMRC had received 23,624 registration applications — 60% of the estimated venues.

The HMRC has said that it intends to continue to promtoe educational and compliance activity about this new tax, as some establishments are unaware of their obligation to fulfil this tax requirement.

Venues that fail to comply with the gaming machine tax can receive a fine to the tune of 30 to 100 per cent of any unpaid tax.

There is evidence however that the majority of venues have now made arrangement to pay this tax with 30,750 operators of taxable machines registered to date.

A HMRC spokesman said: ‘It is important that HMRC provides a level playing field for all operators of gaming machines. We have guidance available, for all those who have registered, to understand their responsibilities, as well as guidance for those unsure if they need to register.’

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