Development of Gambling Business in the UK: Forecasts for 2022
Since 2012, there has been a rule according to which profits from remote gambling sharpgambler.co.uk are subject to UK tax if received in the UK. The rule of the place of consumption has been introduced - offices from the United Kingdom do not pay a percentage of foreign profits to the budget, but foreign casinos are obliged to deduct the crown if they entertain its citizens or guests of the country.
How do you know if a player is from Britain?
The legislation prescribes the payment of taxes on all money received from people who gamble in the UK. Accordingly, the bookmaker or online entertainment provider is obliged to check the location of the clientele, and regularly. The collected data is checked by the regulatory body - the British tax HMRC, in which the office is registered if it wants to conduct business in Britain legally. The entertainment provider must ask the customer for the address of residence at the time of registration. Players who do not fill out the appropriate box are allowed, but then HMRC will treat the “offenders” as UK residents and claim tax on their deductions. By itself, the client's answer cannot be regarded as a priori reliable information - the provider is obliged to check how much the specified corresponds to reality. For these purposes, at least they use identification by IP, in addition, many representatives require authorized users to verify their passports and registration. As additional sources of information, which are resorted to in case of ambiguity of information, addresses from bank statements or linked to credit cards, as well as the national prefix of the contact phone number, can be used. For customers whose location, after all checks, could not be accurately determined, the UK two-indicator rule applies. Any two sources indicating the location of the client in the territory of this state give the tax authority the right to consider the location confirmed and demand tax.
Actual taxes for 2022
Only online casino profits are taxed, not all income from UK users. There are a number of exceptions in which even lost bets by a British player are not taxed - for example, bets on foreign (relative to Britain) sports and spread bets in the United Kingdom are tax-free. However, the combination of bookmaking and online casino results in the provider being regarded as a potential gambling taxpayer. The taxes listed below are not necessarily paid altogether - each of them is tied to a specific area of activity and only concerns the profit received from this particular type of activity.
A general tax on rates (GBD)
This tax applies to bookmakers and relates to profits derived from UK players from sports betting, with or without a pool. Even betting exchanges and activities related to the distribution of bets accepted by other bookmakers in the United Kingdom are subject to taxation. According to the current rules, some of the rates are not subject to mandatory registration with the tax, therefore, may not be subject to GBD. These include bets on dog races or horse racing, provided that the money is bet the old-fashioned way, "live" - when the bookmaker is directly at the venue and personally concludes a deal with the better. All other types of bets, including those on any sports matches and events made online, over the phone, on behalf of another person or through a betting exchange, are subject to GBD taxation. The interest charged depends on which rate is taxed. The fixed odds and the totalizator, the most common among bettors, require the bookmaker to deduct 15% of the winnings to the budget. Spread bets are paid at a modest rate of 3%. The rest of the rates, which cannot be attributed to the first two categories (for example, with a pool), imply taxation of 10%.
Pool Rate Tax (PBD)
This tax is already more specific - it concerns bookmakers, but not all of them. To qualify for PBD, you cannot accept bets on dog racing and horse racing, but you need to accept bets on other sports without fixed odds when the exact amount of an individual player's win depends on how many other lucky players there are who have guessed a number of events in the ticket. ... PBD is paid in two cases: either a Briton makes a bet in an office of any jurisdiction in the world, or the player's nationality does not matter at all if he bets personally in a British office. The amount of deductions in all cases is 15% of the profit.
Remote Gambling Tax (RGD)
This obligation applies to online casinos and bookmakers operating over the Internet, without or as an alternative to land-based offices. The principles of registration and filing of reports for such providers are discussed above - it remains to add that the tax rate on profits from all players spending money on games in Britain is 21%. The tax burden increased significantly in 2019 - before that the RGD was calculated at a rate of 15%.
Outcomes
With ground branches, everything is clear - being located in the UK, they are required to have registration and pay deductions to the budget. However, the digital segment of the industry is also interesting for the local tax authorities.