Bingo taxation
This note discusses the development of the current structure of bingo duty, before looking at the decision by the Government to cut the rate of bingo duty to 10% in Budget 2014.
Prior to a major reform in October 2003, bingo duty was charged on the total weekly stake money paid to bingo promoters by players as payment for their cards, plus ‘added prize money’ (the amount – if any – by which the total value of prizes won in the same week’s bingo exceeded the weekly stake money, less duty). Concerns about the growth of online gambling services supplied by companies based outside the UK led to reforms being made to taxes on other forms of gambling – to general betting duty in October 2001, and to pools betting duty in April 2002.
In the 2003 Budget the then Chancellor Gordon Brown announced that the levy on bingo stakes would be replaced with a gross profits tax on bingo companies; the new tax would be introduced from 4 August 2003 at a rate of 15%. Following representation from the industry, the launch was delayed until 27 October 2003. Industry concerns about the way the new tax would interact with VAT resulted in the legislation being amended during its passage through Parliament.
Subsequently the bingo sector experienced considerable financial difficulties, and the industry lobbied to have VAT exempted from the participation fees bingo clubs charged players, arguing that this was equivalent to double taxation. For some years the Labour Government opposed this, arguing that the tax treatment of bingo was not a root cause of the industry’s problems, and that removing VAT from participation fees would cost the Exchequer a significant sum of money.
However in his 2009 Budget the then Chancellor, Alistair Darling, announced VAT on participation fees would be scrapped, to simplify the tax regime, while the rate of bingo duty would be increased from 15% to 22% from 27 April 2009. The industry welcomed the removal of VAT, but strongly criticised the new rate of duty. In his Pre-Budget statement on 9 December 2009 Mr Darling, announced that bingo duty would be cut, from 22% to 20%, from Budget 2010. The industry has continued to raise concerns over the level of bingo duty, arguing that bingo is disadvantaged compared with other forms of gambling, including bingo played online. In his 2014 Budget speech the Chancellor, George Osborne, announced that the rate would be cut to 10%.