Firstly Happy New Year for 2025 for us all at Comrie.
There will hopefully be a lot of changes this year, with potentially card payments and new stakes and prizes for fruit machines. but lets not get ahead of ourselves! We get asked a lot about MGD and VAT payments on fruit machines, so hopefully the below will help you. If it is still not clear, feel free to call us and have a chat as we are always on hand to help.
Machine Games Duty / VAT on machine income
Machine Games Duty (MGD) is the taxation system for gaming machines. For pubs MGD will apply to Category C and Category D machines (also known as fruit machines / AWP).
MGD on Category C machines is charged at 20% (Applies to cash and cash equivalents such as tickets or vouchers).
MGD on Category D machines is charged at 5% (Applies to cash and cash equivalents such as tickets or vouchers).
MGD is not payable on Category D machines such as crane grabbers that pay out prizes, the takings are instead liable to VAT.
In managed pubs it is the operating company who must register for MGD. In leased pubs or free houses, it is the responsibility of the lessee/ tenant or freeholder. You need to register for MGD with HMRC and they will supply you with a PIN / activation code if you are filing online and a Machine Games Duty Registration Certificate.
Machine suppliers can explain how to register and are likely to ask to see your MGD registration confirmation or will check the HMRC on-line register before supplying you with machines.
You can authorise a MGD Agent to register and complete your returns on your behalf. This could be your machine supplier or an independent accountant. You remain responsible for the tax liability, and you need authorisation from HMRC for an Agent to act on your behalf; this is dealt with during the registration process.
With a category C fruit machine (£100 jackpot) the MGD is 20% of the profit in the cash box. This is not off settable like vat. Have a look at the link below to read more about MGD on HMRC’s website.
