Financial Secretary to the Treasury, Paul Boateng, said:
''Today sees the start of a new era for betting in Britain. Taxfree betting is great news for punters, but the benefits go much wider than that. These reforms will allow Britain''s betting industry to become a worldleader in the international betting market. And as the bookmakers'' turnover increases, racing and Government revenues will share in the benefits.''
The Chancellor announced in the 2001 Budget that the current tax on betting stakes would be replaced with a tax on bookmakers'' gross profits (details of this are available at Annex A). The implementation of the reforms has been brought forward by three months because of a positive and rapid response by the betting industry.
As a result of these reforms, the largest bookmakers have relocated their offshore sites to the UK, and will remove the 9 per cent deduction previously charged on punters'' stakes. Hundreds of new jobs have also been created, as bookmakers gear up for the rapid increase in demand expected in their highstreet shops and through their telephone and online betting services.
The Government has also announced changes to accounting arrangements under the new system, which will cut compliance costs and improve cashflow for the smaller bookmakers who make up more than half of all UK betting firms.
Bob Scott, Chief Executive of Coral Eurobet, plc, said:
''The expected significant growth in turnover will be matched by a sizeable increase in job opportunities across the industry. This is without doubt the most important day in the history of betting. The Government has made a huge investment in the betting industry, one we will demonstrate has not been misplaced. This is a win, win situation for customers, bookmakers, the racing industry and Government. ''
David Harding, Chief Executive of William Hill, commented:
''The abolition of betting duty and the introduction of zero deduction betting will herald a new era for punters and the UK betting industry. William Hill is committed to establishing the UK as the centre of excellence in the global betting market. If projected business levels are achieved, William Hill anticipates creating up to 1,000 new jobs across its betting platforms. We are confident that the Government''s willingness to support our industry will be richly rewarded.''
Chris Bell, Chief Executive of Ladbrokes Worldwide said:
''The betting duty reforms will be great for customers, great for bookmakers and ultimately great for the Government. We have been preparing for this since April. We have increased our workforce by 10% and we are ready to do our bit in retail betting, telephone betting and internet betting to ensure that that the UK becomes the world centre of betting excellence.''
NOTES TO EDITORS
The Gross Profits Tax
How the Gross Profits Tax works
Under the old system, a customer placing a #10 bet at odds of 21 pays an additional charge of 9% (#0.90) representing:
From today, the customer will pay no deductions when placing the same bet. The tax charge, levy and administration charges will be absorbed by the bookmaker.
|Old General Betting Duty||New Gross Profits Tax|
|Return on a 2-1 bet||£30.00||£30.00|
|Net gain to punter||£19.10||£20.00|
Basing the tax on gross profits allows bookmakers to offset winnings paid out against stakes received. It also recognises the commercial reality that margins are generally tighter on telephone and online betting than on cash betting in shops, thus giving a particular boost to these two growth areas.
Details for businesses of the operation of the duty system are published in the Customs and Excise information note ''Reformed General Betting Duty'' which is available on the Customs and Excise Internet site: http://www.hmce.gov.uk.
Information is also available from Customs and Excise Advice Centres: tel. no. 0845 010 9000.