HMRC proposes changes to freeplay taxes after Jumpman ruling

For the British betting industry, the standout change in yesterday’s budget was of course the five point increase in Machine Games Duty (MGD), but a proposed change to Remote Games Duty (RGD) has gone a little more under the radar. A policy paper published by HM Revenue and Customs (HMRC) yesterday revealed a proposed amendment to the 2014 Finance Act relating to RGD – specifically how the online gaming tax is applied to ‘freeplays’, like free bets and free spins promotional offers. The proposed change comes a few weeks after Jumpman Gaming won a major legal case around taxation of promotional bets. The firm saw its tax bill of £3.2m wiped clean by the Upper Tribunal. How does HMRC want free bets to be taxed? HMRC has proposed that “freeplays”, as referred to in the 2014 Finance Act, should be referred to as “restricted plays”. The tax office detailed that operators offering tournaments or “other arrangements” will be affected by the amended legislation. The office wants to set out the exact circumstances in which a freeplay won from another freeplay can be excluded from an operator’s tax bill. It wants to see a won freeplay excluded when used for remote gaming and when no other benefit has been offered as a result of its use – i.e if another freeplay hasn’t been won via its use. It also wants to amend the meaning of a “prize”, setting out that something is only a prize when it is required to be paid or provided under the published rules of a game. This could also see the return of payment when a game is interrupted or terminated be treated as a prize. Lastly, HMRC wants to classify playing a free tournament as playing a game of chance and wants to give its commissioners extra powers to regulate when a gaming payment is, or is not treated, as waived and when an amount paid to participate in a tournament is disregarded. HMRC’s proposals form part of Finance Bill 2026-27, and would take effect from 1 April 2027 – the same day that the General Betting Duty (GBD) will increase from 15% to 25% and when the rate of MGD on Category B gaming machines will increase from 20% to 25%. What is HMRC’s motive? The tax office states that it wants to establish “clear rules” for how restricted plays, prizes and tournaments are taxed via RGD. It argues that this will provide “greater certainty” for operators, “reduce the scope” for dispute, and protect revenues. The timing of the proposal after the above mentioned Jumpman Gaming tribal decision. HMRC’s stated objective of protecting revenues is interesting in this case. As mentioned above, Jumpman’s entire tax bill was wiped clean after the tribunal concluded that the application of RGD to money re-wagered after being won via free bets was incorrect. In short, by amending the Finance Act 2014’s clauses around RGD, HMRC wants to: Ensure that future tax revenues from online gaming are disrupted due to uncertainties around the taxation of free games which customers are given after making deposits or placing bets, and which can result in more free plays being won further down the line. Prevent legal showdowns like Jumpman Gaming’s tribunal case regarding its multi-million tax bill from happening again.