New Fruit Machine Tax

The UK Fruit Machine industry is reeling today after the announcement by Chancellor George Osborne that real world Fruit Machines will be subject to a new 20% tax (Machine Games Duty).

The manufacturers of the fruit machine games had anticipated the new tax. However, it was hoped that the Chancellor would scrap the existing licence duty and VAT rate making the change ‘Revenue Neutral'. Fruit machine manufacturers expected the new MDG tax rate to be set at 15%, but the Chancellor had other ideas, fixing it at 20%.

Fruit machine games are hugely popular with pub-goers and publicans alike, not surprising as the machines can add up to 4% to a publicans bottom line.

Brigid Simmonds a BBPA (British Beer and Pub Association) spokesperson reacted to the news by stating “This is a bitter blow, For this new tax to be revenue neutral it should not have been more than 15%. It will cost the pub secotr £14 in extra taxes next year.” Adding that the new tax could see some machines disappearing from pubs altogether.

The MDG tax was seen as a double whammy by the pub trade, as the Chancellor also hiked beer duty rates on the same day, increasing the duty by 2% above RPI inflation, so prices will rise by 5% from next week. Camra said the announcement will lead to the price of a pint increasing by between 5p and 10p in pubs and means that beer duty has increased by more than 40% since 2008.

The new MDG tax is set to be introduced by 2013, which may give the industry time to lobby for amendments before it's introduction. It looks like the only winner from today's news was HMRC Treasury.