Many of the betting companies operating in the UK do so through hundreds of high street branches. But a great proportion of bets are also placed on-line via on their websites and phone lines. Such on-line bets are regulated and taxed not by any UK authority but by, for example. the British overseas territory of Gibraltar. Major betting companies with these ‘remote’ on-line activities include high street names such as William Hill, Ladbroke, Betfair, PaddyPower and 888.
Because the on-line bets have to date been taxable in the place where the bets were placed ie outside the UK, no tax was payable in the UK. Hence many betting companies have heavily marketed their on-line betting, resulting in a lower rate of taxation than for those based wholly in the UK. Gibraltar’s tax of 1% of bets, capped at UK£400,000 tax, compares to the much higher UK tax rates of 15% of total gross profit. Some claim that these different rates of taxation between companies is unfair competition.
Commencing in 2015 (which month?) the UK Government is to introduce a new gambling tax centred on “point of consumption” – taxing where the bet is placed – rather than where it is taken (“point of supply”). The rate of tax may be up to 15% of bets received. Some estimate that this tax may raise £300m pa for the UK Government. Some claim that because this tax will apply to all the betting businesses operating in the UK, it is more fair between them.
So next time you wander passed ( into? ) a betting shop on your high street, or see an advert on TV, you’ll maybe feel the presence of Gibraltar.