New MGD Fruit Machine Tax


There are as always a lot of changes for pub & clubs , the one relating to your fruit machies is the new gaming tax on fruit machines MGD ( Machine Games Duty). Oh no not another tax I hear you say! Yes, but they are removing fruit machine custom & excise licences and also the money in the cash box will no longer be applicable to VAT.

It was announced in December 2010 with an implementation date for the 1st February 2012. Every public house, social club or other venue that has a fruit machine installed must register for the MGD tax. We have spoken with the HMRC and the necessary forms for  registration will not be available until 1st November 2012. With this said you have to have them completed and returned to HMRC by 1st January 2013.

With hindsight HMRC should have released the forms a lot earlier as this is new to everyone and as with all new systems and forms there are always teething problems, also the timing of the landlords busy period would be fast approaching. Never the less whilst you are rustling around paperwork for your Christmas trade HMRC insists the forms have to be returned by 1st January 2013.

We will with our fruit machine customers be printing the forms off when available and take them round to our customers to get  them to fill them in and then submit them ourselves so that we can make sure that they are all registered and able to understand what they are going to need to do. With this in mind I urge you to speak with your fruit machine supplier about this or go to HMRC’s website after the 1st November 2012 and look at and print off the necessary forms.

The new MGD  tax has been set at two different levels, for fruit machines, Category C, which is any fruit machine with a jackpot over £5 cash and more to play than 10p (which most pub/club fruit machines are) then the tax rate is 20% of the net take of the fruit machine. The second tier is for fruit machines category D, this is any machine with a £5 cash jackpot and no more than 10p play, the new tax rate is 5% of the net take of the fruit machine.

As I mentioned earlier as of 1st February 2013 you will no longer need an  AMLD (Amusement Machine Licence Duty) customs & excise licence for your fruit machine but you will need to have one in place up to the new implementation date. On the positive side, you can now trial extra fruit machines with no fixed cost, so where before you perhaps were thinking of trying a second or third fruit machine but due to the cost of the £900 for a customs and excise licence decided not to, you can now have an extra fruit machine installed and only pay any tax if the machine earns money.

Also, just to clarify fruit machines will no longer be vat-able on the cash box take. So it is just the MGD tax at 20% (if a £70 machine) that you pay to HMRC. Whilst this rate is the same as you previously pay under VAT, none of the MGD tax is reclaimable and as with all things these days this will burden the pubs, clubs and machine operators with more paperwork and red tape which all adds up to more cost.

I do urge you to speak with your fruit machine supplier or give us a call to talk over as it will pay to be prepared and all registered before the 1st January 2013, it comes around a lot quicker than it sounds!

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I own a take-away, am I allowed to have a fruit machine?

We get regular phone calls from people who own cafes, fish and chip shops, taxi companies and take-aways asking about whether they can have a fruit machine on their premises.  So to help anyone surfing the net and our regular blog readers we thought we would help clear this matter up with regard to what type of machines are and are not allowed in these businesses. 

Fruit machines used to be a regular site in your local fish and chip shop or take-away.  But since the new 2005 Gambling Act game into force on 1 September 2007 all gambling machines (fruit machines) are no longer allowed on these premises which includes any type of take-away, shop, cafe, taxi office or similar business. 

Only premises with a license, under the Licensing Act 2003, for consumption of alcohol on the premises that contains a bar where alcohol is served, but without a requirement that alcohol is served only with food (public houses, social clubs, private members clubs etc).  This was brought into force to ensure that children and other vulnerable people are not exposed to gambling in certain non-gambling premises. 

“But my local fish and chip shop has a fruit machine?” 

If a fish and chip shop or take-away has a fruit machine they are breaking the law as there is no exceptions.  We do come across this from time to time and our advice is it is not worth doing as there are big penalties/fines if you are caught with a fruit machine on your premises unlicensed. 

Or, it may not be a fruit machine and it just looks like one!  (confusing, I know!)  But cafes, fish and chips shops etc are allowed SWP machines which stands for Skill with Prize machines.  These machines are skill or quiz based and can have a jackpot up to £50.00 in cash and do not require any local council permits/license or need a custom and excise license.  Some of these machines come in a similar type cabinets as a fruit machine hence confusion of what type of machine they actually are. 

So, sorry to say, but no fruit machines are allowed in fish and chip shops, take-aways etc but you can have a Skill or Quiz machines to entertain your customers.


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