Gambling tax hike dodged in the UK - for now

The UK gambling industry could almost be heard releasing a collective sigh of relief on Wednesday by anyone who has been following the rumored double-digit tax increase on gambling products in the country.

Grabbing headlines and eliciting a strong response from industry bigwigs who have not hesitated to describe the potential change to taxation law on gambling as "nothing short of stupidity," the speculation can be put to rest – for now.

Gambling dodges tax hike in the UK for the time being

The UK Chancellor Rachel Reeves has indeed announced a tax increase, but on the super-rich, while gambling was not addressed in her budget. Markets responded in kind with gambling stock rallying on the news that companies won't have to pay 50% of operator profits, by upping the tax rate on remote gaming duty.

This is evidently not going to come to pass now that the Chancellor announced her budget. The tax was first described by The Guardian, a newspaper with a very firm editorial policy on gambling that has criticized the industry repeatedly.

The publication suggested that the tax was incoming and that it was based on the work of the Institute for Public Policy Research, which reportedly proposed the tax increase as a way to bolster the ailing public purse, but also adjust gambling taxation that is falling behind other jurisdictions already.

However, the industry realizes that it cannot be too happy about how the budget reads. The budget did not rule out the gambling industry as a potential place of revision when it comes to the country’s tax collection practices.

Essentially, this change may be postponed until next year, with the budget stating that the "government will consult" with stakeholders to establish a single tax for the industry, rather than the current three-tax structure.

This move would be designed to "simplify and future-proof" the industry’s taxation system and close any loopholes that may still exist. In other words, a change to taxation is coming in the United Kingdom and the gambling industry, and if historical precedent means anything, the tax rates are going to go up.

Simplifying and future-proofing the gambling taxation system

This is especially true now that the public is overwhelming in support of targeting the gambling industry with an extra tax to help prop up public finance. Tax hikes are not just happening in the United Kingdom either.

The Netherlands is phasing in a new taxation system, and Italy is also having a tax run on its gambling industry. France has proposed an iCasino framework that comes with a steep fifty-per-cent-plus tax rate, which has been put on the back burner.

All told, however, the global trend is towards raising taxes on gambling. Markets may be buoyant for the time being, but a day of reckoning is coming.

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