What Does The Change In UK Gambling Tax Laws Mean To You?
This week George Osbourne, the current Chancellor of the Exchequer of the United Kingdom, announced in his budget that the laws on the was gambling firms in the UK were to be taxed. This has lead to a number of doom-mongers claim that the online poker world in the UK will become similar to that in France and Italy with the worst case scenario being the UK following in the footsteps of our cousins from across the pond, the United States of America.
In reality what will actually happen is nothing. The change in taxation laws are aimed at the companies and not the actual players themselves, and for the most part the government is targeting the sports betting arms of these companies, companies that left the shores of the UK in order to pay less tax in havens such as Malta and Gibraltar.
Until 2001 the UK had one of the lowest taxation rates for gambling organisations but the then Chancellor Gordon Brown thought it would be a great idea to increase the tax on these companies to 15% of their profits. He obviously thought that this would raise huge revenues but what he failed to see was the fact 15% of nothing is actually less than the money the country would benefit from under the old tax rate. This increase in tax on the company profits meant that British gamblers did not have to pay the 9% betting duty, which was abolished.
Almost immediately some of the biggest gambling companies in the UK and in the world in William Hill and Ladbrokes moved their head offices abroad to avoid paying the hike in taxes, although some including bet365 have stuck around but at least once a year they issue a statement saying staying in the UK is making them less competitive when compared to companies operating abroad but still offering their services to UK customers. Ironically the then-Government owned Tote was also based offshore, the Tote of course now belonging to Betfred after being sold; Betfred being another company to base it HQ offshore.
What the government is proposing is that these offshore gambling companies are taxed on the profits they make within the UK. So for example, they make £10,000,000 profit from UK customers then they pay 15% on that figure but profits the company generates outside of the UK is not taxed. This means the companies will have extra overheads but it will still be more than worth their while allowing UK-based customers to use their services because their argument was why should the pay tax on money they have generated outside of the UK because major banking institutions certainly do not and neither do companies such as Vodafone.
So yes the tax laws have changed in the UK but it is not something you should be worried about. You can still grind it out at the felt, and do so without paying a single penny in tax, it's just some companies are going to have to pay tax on the rake you generate for them.