Machine Games Duty (MGD) is a tax that needs to be paid over on games machines if at least one of the prizes on offer is cash and greater than the smallest cost to play the game to start with. This also includes machines such as quiz machines and other skill machines.
All pubs with gaming machines and other machine games need to be covered by an MGD registration and should have already registered with HMRC. You will be liable to penalties if you have a dutiable machine available for play and you haven’t registered!
If you own a machine that does not offer cash prizes you will not need to pay MGD. The same is true if there are cash prizes but they are less than the cost to play. You may however still need to pay over VAT.
There are, since March 2015, three rates of MGD:
|Machine Type||Cost to Play||Prize||Rate of MGD|
|Type 1 (Lower rate)||20p or less||£10 or less||5%|
|Type 2 (Standard)||21p to £5||£11 or more||20%|
|All others (Higher)||Over £5||Any||25%|
If your machine has games which cover more than one type, then the rate for all the games will be whichever is the highest. For example, machines with both standard and higher rate games, will be charged at the higher rated 25%
If you pay MGD on your games machines, then the income is exempt from VAT.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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