Gaming Machine Duty (MGD)
Updated: Jul 7, 2023
Since February 2013 Gaming machine licenses have been replaced by Machine Games Duty (MGD). The scheme is tax taken as a percentage of the profit from the machine. There are three bands of duty.
Lower Rate 5% - Maximum cost per game 20p maximum prize £10
Standard Rate 20% - Maximum cost per game £5 with no maximum pay-out
Higher Rate 25% - Maximum cost per game exceeds £5
Any machine that is subject to MGD will be exempt from VAT. If you’re a VAT registered business and you're currently paying or due to start paying MGD it's worth making sure you’re not paying VAT on your machine profits.
Examples are shown below which in some circumstances can be at a lower rate than VAT. Unlike VAT, MGD is calculated on the gross takings:
Example 1 - Revenue from non-gaming
£100 i.e. from a pool table or Jukebox. VAT is calculated at the standard rate of 20% net £100 ÷ 6 = £16.67 VAT Liability
Example 2 - Lower rate MGD
£100 i.e. from a 10p play, £5 jackpot gaming machine. MGD is calculated at the lower rate of 5% gross. £100 ÷ 20 = £5.00 MGD Liability
Example 3 - Standard rate MGD
£100 i.e. from a £1 play, £100 jackpot gaming machine. MGD is calculated at the standard rate of 20% gross. £100 ÷ 5 = £20.00 MGD Liability
Invicta Amusements are HMRC approved MGD agents. This means we can take care of your registration if we are supplying you with gaming machines on profit share we can collect the MGD liability, submit & pay your duty at no extra charge.
HMRC have produced a simple flowchart to work out if you need to register. This can be viewed by clicking the download link below.
Invicta Amusements supply a range of gaming machines, please contact us to discuss our products further or view the product pages below:
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