Before the Autumn Budget was revealed in full on 30 October, many people working in the UK’s gambling industry were concerned.
After all, there were rumours of tax raids that would have had a negative, long-lasting effect on key parts of the gambling sector. Here’s a look at what might have been revealed in the Budget and what actually happened.
The Two Key Proposals That Were Rumoured
Before the Budget was formally announced, two different proposals for the gambling industry were rumoured. One would have had quite a large impact on the industry; the other would have still affected it, but not as much.
The first and more serious proposal that the Treasury was considering was from the Institute of Public Policy Research (IPPR). This would have involved doubling various gambling-related taxes such as the 15% duty on profits made by betting shops. This would have placed a great burden on brick-and-mortar venues, many of which were already struggling due to higher bills and other rising costs.
In fact, if this proposal had been put into effect, quite a few bookies up and down the country would have ended up closing. They wouldn’t have been able to afford the increase in taxes on top of all their other payments. If this proposal had gone ahead, it could have generated as much as £3 billion in additional revenue for the government.
Another point to make is that if land-based sportsbooks faced tax increases, they probably would have passed on the costs to customers. This would have done this by offering worse odds so punters would have made slightly less money per bet. Betting shops that adjusted their odds to lose less money would have been at a disadvantage since other, larger shops would have continued offering better odds.
As for the other proposal the Treasury was looking at, this was from the Social Market Foundation (SMF). It would have involved increasing taxes for online gambling from 21% to 50%, which would have brought the government an additional £900 million in revenue.
The Reason Either Proposal Could Have Gone Ahead
Both of the proposals would have helped the government make a large amount of money. According to reports, there’s a £22 billion black hole in public finances that the government is trying to plug, but without affecting working people too much. This is why it’s targeting companies, not individuals.
The gambling industry as a whole is clearly very successful with quite large profit margins in some areas. In other words, there’s room for greater taxation and the government could easily generate more money from people’s gambling if it wanted to. However, any sort of tax raid on the gambling industry would have knock-on effects somewhere down the line, as discussed previously.
What Did the Budget Say About Gambling?
People throughout the gambling industry were worried that significant tax hikes were coming. If either of the two proposals had gone ahead, there could have been serious repercussions that would have affected quite a lot of businesses and companies.
Thankfully, the gambling industry wasn’t mentioned in the Budget, with the chancellor, Rachel Reeves, looking elsewhere for tax increases. When the news of this was delivered, the gambling sector was relieved, to say the least. However, this doesn’t mean that things will stay the same forever. There’s a good chance that in next year’s Budget, the gambling industry will be targeted and will thus be affected by some sort of tax hike.
What Could Happen Next Year?
There’s speculation that the tax system for gambling in the UK could be overhauled next year. At the present time, gambling has two main tax rates: 21% for remote gaming operator profits and 15% for both betting and pool betting. In 2025, these should be consolidated into a single rate, though there’s no indication of what this rate would be. Whatever happens, there’s surely going to be an increase in taxation for some of the UK’s gambling activity.
Even though there were concerns about large tax hikes, some people in the industry have a more optimistic feeling about the future. They think that because gambling wasn’t targeted at all, if it is going to be subjected to tax hikes, they’ll be on the smaller side. After all, there are lots of other sectors that the government can gain taxes from, as proven by this year’s Budget.
It seems as if the industry is breathing a sigh of relief. It’s avoided the rumoured tax raids that would have had profound effects, and the future looks promising to a degree. Increases in taxation are inevitable, but it looks like those rises could very well be reasonable and very much manageable.
How Will Online Casinos Be Affected?
In recent years, gambling activity in the UK has increased. Online gambling in particular has become very popular indeed. Many people regularly spend money playing online casino games for real money, place bets on sporting events and practise other types of gambling.
Online casinos are more successful than online sportsbooks in the UK. Both of them generate billions of pounds every year, though it’s casino sites that bring in the most money. This is mainly due to the fact that there are always new online casinos launching and the number of games is increasing at a fast pace.
Slots are by far the most popular online casino game in the UK. It’s clear to see why since they come in an endless range of themes and have all sorts of special features to make their gameplay appealing. These include, but are not limited to, free spins, pick-me games, multipliers, expanding wilds, mini games and progressive jackpots.
If tax rises do come to online casinos, players will probably not be affected by them too much, especially if they’re moderate. What will likely happen is that the companies running casino sites will dip into their profits to cover the increase in taxation. Whatever happens with regard to tax increases and simplifying taxation, the popularity of gambling (both real-world and online) will surely continue to rise.
Read more:
UK Gambling Avoids Tax Increases in UK Budget
