Online gambling companies will face an increase in taxes aimed at addressing problem gambling, while bingo establishments will see a positive change in their tax obligations.
Chancellor Rachel Reeves has confirmed that the tax rate for remote gaming will rise from 21% to 40% starting in April next year. This sector is a significant revenue source for the government, generating £1 billion annually.
According to the Office for Budget Responsibility, doubling the tax rate is projected to bring in an additional £1.1 billion per year by 2029/30. The IPPR think tank had suggested raising the tax rate to 50%.
In addition, a new general betting duty rate of 25% will be introduced for online gambling starting in April 2027. Reeves emphasized that horse racing will be exempt from this new rate to protect the sport from the changes.
On a positive note, bingo halls will benefit from the removal of the 10% duty that previously applied to the game.
Former Labour Prime Minister Gordon Brown advocated for increased taxation on online gambling profits to potentially lift 500,000 children out of poverty by raising £3.2 billion.
The Treasury justified the tax increase on online gambling by stating that while it is enjoyed by many in the UK, it can also lead to harm, necessitating measures to address the negative impact.
However, the OBR forecasted that players may bear the brunt of the online tax hike, as operators are likely to pass on around 90% of the duty increase through higher prices and reduced payouts.
Dame Meg Hillier, chair of the Treasury Select Committee, supported the Chancellor’s decision to increase the tax rate for remote betting to reflect the harm it causes, particularly with highly addictive casino games.
Adam Rivers, managing director at Alvarez and Marsal, highlighted the impact of the tax changes on the online sector, noting that the adjustments could provide relief to land-based bingo operators and support the hospitality sector.
Brant Dunshea, acting chief executive of the British Horseracing Authority, praised the Chancellor for recognizing the importance of racing and maintaining the horserace betting duties, which support thousands of jobs across the country.