Betting Tax

Financial Secretary to the Treasury, Paul Boateng, said:

''Today sees the start of a new era for betting in Britain. Tax­free betting is great news for punters, but the benefits go much wider than that. These reforms will allow Britain''s betting industry to become a world­leader in the international betting market. And as the bookmakers'' turnover increases, racing and Government revenues will share in the benefits.''

The Chancellor announced in the 2001 Budget that the current tax on betting stakes would be replaced with a tax on bookmakers'' gross profits (details of this are available at Annex A). The implementation of the reforms has been brought forward by three months because of a positive and rapid response by the betting industry.

As a result of these reforms, the largest bookmakers have re­located their offshore sites to the UK, and will remove the 9 per cent deduction previously charged on punters'' stakes. Hundreds of new jobs have also been created, as bookmakers gear up for the rapid increase in demand expected in their high­street shops and through their telephone and on­line betting services.

The Government has also announced changes to accounting arrangements under the new system, which will cut compliance costs and improve cash­flow for the smaller bookmakers who make up more than half of all UK betting firms.

Bob Scott, Chief Executive of Coral Eurobet, plc, said:

''The expected significant growth in turnover will be matched by a sizeable increase in job opportunities across the industry. This is without doubt the most important day in the history of betting. The Government has made a huge investment in the betting industry, one we will demonstrate has not been misplaced. This is a win, win situation for customers, bookmakers, the racing industry and Government. ''

David Harding, Chief Executive of William Hill, commented:

''The abolition of betting duty and the introduction of zero deduction betting will herald a new era for punters and the UK betting industry. William Hill is committed to establishing the UK as the centre of excellence in the global betting market. If projected business levels are achieved, William Hill anticipates creating up to 1,000 new jobs across its betting platforms. We are confident that the Government''s willingness to support our industry will be richly rewarded.''

Chris Bell, Chief Executive of Ladbrokes Worldwide said:

''The betting duty reforms will be great for customers, great for bookmakers and ultimately great for the Government. We have been preparing for this since April. We have increased our workforce by 10% and we are ready to do our bit in retail betting, telephone betting and internet betting to ensure that that the UK becomes the world centre of betting excellence.''


The Gross Profits Tax

  1. Budget 2001 announced that ­ following extensive consultation and analysis ­ the current General Betting Duty of 6.75 per cent on total stakes would be replaced with a 15 per cent tax on bookmakers'' gross profits, defined as the difference between the stakes laid with them and the winnings they pay out. This is explained in more detail at Annex A.

  2. This reformed tax structure has made it possible for bookmakers to absorb the tax and to end the 9 per cent ''deduction'' that they currently charge punters. This will enable them to expand their domestic and international business from an onshore base, competing from a position of strength in the growing global market for telephone and on­line betting.
    Progress since the Budget

  3. Since the Budget, those major bookmakers with offshore sites have made rapid progress in relocating them to the UK. This has already led to the creation of several thousand new jobs within the UK both in the traditional high­street betting shops and in call centres designed to cater for the growing telephone and on­line betting markets.

  4. The decision by Ladbrokes to take on an additional 1,200 staff in its betting shops and by William Hill to recruit around 1,000 extra staff in its shops and telephone betting operation provide clear evidence of the confidence the UK betting industry has in its future growth.

  5. A number of other, smaller on­line betting firms such as and have also started up in the UK to take advantage of the new system. Other offshore sites have made enquiries about re­locating to the UK, and are expected to do so once the necessary regulatory requirements are met.

    Smaller bookmakers

  6. There are hundreds of smaller, independent bookmakers in the UK, often operating out of single shops. The Government recognises that ­ like other smaller businesses ­ they need help to reduce their compliance costs and improve their cash­flow.

  7. Customs have therefore introduced new accounting arrangements for smaller bookmakers under the new Gross Profits Tax system. Instead of having to account for the tax every month, bookmakers with an annual turnover below #600,000 will be allowed to account for tax on a quarterly basis. This will reduce their costs and improve their cash­flow. It will also allow them to manage the occasional, one­off months when they make a loss.

  8. These provisions will also be available to financial spread bet bookmakers and any other bookmakers experiencing genuine difficulties with loss­making months.


How the Gross Profits Tax works

Under the old system, a customer placing a #10 bet at odds of 2­1 pays an additional charge of 9% (#0.90) representing:

From today, the customer will pay no deductions when placing the same bet. The tax charge, levy and administration charges will be absorbed by the bookmaker.

For example:

  Old General Betting Duty New Gross Profits Tax
Stake £10.00 £10.00
Deduction £0.90 £0.00
Return on a 2-1 bet £30.00 £30.00
Net gain to punter £19.10 £20.00

Basing the tax on gross profits allows bookmakers to offset winnings paid out against stakes received. It also recognises the commercial reality that margins are generally tighter on telephone and on­line betting than on cash betting in shops, thus giving a particular boost to these two growth areas.

Details for businesses of the operation of the duty system are published in the Customs and Excise information note ''Reformed General Betting Duty'' which is available on the Customs and Excise Internet site:

Information is also available from Customs and Excise Advice Centres: tel. no. 0845 010 9000.  •  •  •
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