HISTORIC PRESS RELEASE : Betting Tax to be Scrapped Early [July 2001]
The press release issued by HM Treasury on 13 July 2001.
The tax on punters will be abolished three months ahead of schedule on the first weekend in October, the Financial Secretary Paul Boateng announced today.
Gordon Brown announced in his March Budget that by January 1, 2002, the current tax on betting stakes would be replaced with a tax on bookmakers’ gross profits, a radical reform which means Britain’s bookmakers will end the deductions they currently charge punters, and look to grow their domestic and international business from a UK base.
Since the Budget announcement, rapid progress has been made both by the bookmakers in re-locating their off-shore operations to the UK and by Customs in preparing to switch to the new system. The Government has therefore decided to bring in the reforms to betting taxation a full three months early.
The new system will now be introduced on Saturday, 6 October.
Financial Secretary Paul Boateng said:
“The old tax on punters has been in place almost unchanged since 1966. But we realised it was not going to work in the 21st century and would mean UK-based bookmakers losing out on the global betting market. Our reforms mean punters will get tax-free betting, bookmakers will see increased turnover, and both racing and Government revenues will share in the benefits.
It’s a good deal all round. We’re therefore delighted to bring it in more than three months ahead of schedule. This demonstrates our ability to deliver real reforms with speed and efficiency – years ago, it would have been inconceivable to introduce these sorts of radical reforms, let alone push them through so quickly.”
Today’s announcement received a huge welcome within the betting industry.
John Brown, Chairman of William Hill, said:
“The Government is to be congratulated on the speedy implementation of the Chancellor’s initiative. We will be ready on the day for every bet we take worldwide to come back the UK.”
Bob Scott, Chief Executive of Coral Eurobet said:
“This will be the biggest day in the history of betting. I would like to applaud the Government not only for having the vision to introduce this revolutionary tax but also for the speed with which they have acted. This represents a major investment by the Government in the betting industry, and one we will demonstrate has not been misplaced. For customers, bookmakers, the racing industry and the Government, this is a win-win-win-win situation.”
Alan Ross, Managing Director of Ladbrokes, said:
“Every betting customer should thank the Government and put the date of October 6th into their diary as this marks the beginning of a new era for the industry. The decision today is a real boost to the betting industry and means that the significant increases in turnover, employment and international reach promised by tax-free betting will happen even sooner than anticipated.”
Tom Kelly, Director General of the Betting Office Licensees Association, said:
“This announcement is excellent news for punters and the betting industry alike. We are looking forward to a new era of deduction-free betting and the British punter getting the best deal in the world.”
Warwick Bartlett, Chairman of the British Betting Offices Association, said:
“Today’s announcement means the British punter will be able to bet tax-free for the first time in 33 years. The onus is now on the betting industry to deliver and make the UK a centre for global gambling. We have already received enquiries from the US, Canada, Australia, Japan, the Netherlands and Sweden from bookmakers interested in coming to the UK as a result of the introduction of a gross profits tax.”
The Gross Profits Tax
In Budget 2001, the Government announced that – following extensive consultation and analysis – the current General Betting Duty of 6.75 per cent on total stakes would be replaced by 1 January 2002 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 reformed tax structure makes it possible for bookmakers to absorb the tax and to end the 9 per cent ‘deduction’ that they currently charge punters. It therefore makes it possible for them to develop their domestic and international business from an onshore base, competing from a position of strength in the growing global market for telephone and internet betting.
Since the Budget announcement, Customs have been working with the bookmakers to make the necessary systems changes needed to implement the reforms, and those UK-based bookmakers with off-shore operations have been relocating them to the UK. Thanks to the rapid progress made, it will be possible to introduce the system from Saturday, 6 October, 2001.
Tax-free betting from October 6
Among the sporting events taking place on the first weekend of tax-free betting are the Prix de l’Arc de Triomphe at Longchamp, one of Europe’s premier horse races, always the subject of racing and betting interest from around the world, and England’s final World Cup Group match at home to Greece.
The international interest in these events reinforces one of the key objectives of the reforms, which is to enable UK-based bookmakers to target an increased share of the growing global market for telephone and Internet betting.
Customs will continue working with the betting industry to make the changes required prior to implementation. They will also shortly be conducting a series of seminars for bookmakers to explain how the new system will work.
