Open consultation

Machine Games Duty: changing who is liable for the duty

Published 28 October 2026

Subject of this consultation 

Implementation of the announced reform to Machine Games Duty (MGD) liability, including how liability should be determined under different commercial arrangements including direct ownership, profit-share, fixed rental or lease, and mixed commercial arrangements.

Scope of this consultation 

The government announced at Budget 2026 that MGD liability will move to the supplier for supplier-owned machines operated under profit-share arrangements. Premises licence holders, permit holders and pub tenants will remain liable where they own the machine outright or use it under a fixed rental or lease arrangement and control the takings. This consultation seeks views on implementation, including the application to different commercial arrangements, business impacts, information and record keeping requirements, compliance risks, unintended consequences and transitional arrangements. It does not seek views on MGD rates, machine stake and prize limits, or wider gambling tax reform.

Who should read this 

Businesses who own, lease or operate gaming machines, including gaming machine rental companies, pubs, clubs, family entertainment centres, adult gaming centres, arcades, bingo halls, casinos and bookmakers. Views are also welcomed from tax advisers, trade and professional bodies, local authorities and other interested parties.

Duration 

The consultation will run for 12 weeks, from 28 October 2026 to 20 January 2027. 

How to respond or enquire about this consultation 

The preferred method is the online response form.  

When responding, please tell us in what capacity you are responding. For example, whether you are a machine supplier, premises licence holder, permit holder, pub tenant, trade body, adviser or other stakeholder. If you represent an organisation, please tell us whom you represent. 

If you are unable to use the online form, or require an alternative format for accessibility reasons, you may submit your response by email to mgd.consultation@hmrc.gov.uk. Enquiries about the consultation can also be sent to this address.

Additional ways to be involved 

For any further queries please contact mgd.consultation@hmrc.gov.uk

After the consultation 

All responses will be considered, and the government will publish a formal response after the consultation closes. The responses will inform the detailed rules and implementation of the reform from 1 April 2028. 

Getting to this stage 

Under the current system, the person responsible for the premises where a machine is located is liable to register, account for and pay MGD. The announced reform changes who is liable so responsibility more closely reflects who controls the machine takings and holds the information needed to calculate the duty. 

1. Executive Summary

Scope of consultation

Machine Games Duty (MGD) is charged on machine games found in pubs, casinos, bingo halls, Adult Gaming Centres, betting shops, clubs and Family Entertainment Centres. However, the way the duty is administered has not kept pace with changes in how machines are owned, supplied and operated. Under the current system, responsibility for accounting for MGD falls on the business operating the premises where a machine is located, even where another business owns or manages the machine.  

The government is committed to ensuring the tax system operates efficiently and proportionately, while reducing unnecessary administrative burdens for businesses. 

As announced at Budget 2026, liability for MGD will move to the supplier for supplier-owned machines operated under profit-share arrangements. The licence holder, permit holder or pub tenant for premises in which a dutiable machine game is provided for play will remain liable where they own the machine outright or use it under a fixed rental or lease arrangement and control the machine takings. This targeted reform of MGD liability shifts responsibility for the duty upstream to the business best placed to account for it. This policy change will take effect from 1 April 2028. We are therefore consulting on the implementation of this policy change and seeking views on any practical issues to consider.

The consultation does not seek views on: 

• MGD rates
• machine stake and prize limits
• wider gambling tax reform

The focus of the consultation is the determination of MGD liability across different commercial arrangements. It seeks views on how the new liability rules should apply in practice, including in cases involving hybrid or more complex arrangements. 

The government welcomes views from businesses and organisations affected by these proposals, including gaming machine suppliers and owners, premises-based businesses, representative bodies, professional advisers and others with an interest in the sector. 

All responses to this consultation will be considered and the government will publish a formal response in due course.

2. Introduction

MGD is a tax on the net takings from machine games in the UK. It is charged at different rates depending on the category of machine (lower, standard and higher), which is determined by its stake and prize limits. 

Currently, the person responsible for the premises where a machine is located is liable to register, account for and pay the duty. 

For the purposes of this consultation, ‘premises operator’ means the business that hosts gaming machines at the premises where they are made available for play.

How gaming machines are currently supplied 

Gaming machines are supplied through three main business models: 

Direct ownership — the premises operator owns and operates the machine and retains the machine takings. 

Profit-share arrangements — the supplier owns, installs and generally maintains the machine. Machine takings are shared between the supplier and premises operator under a commercial agreement. The supplier holds the keys to the machine and is responsible for collecting the takings and giving the premises operator their share of the proceeds.

Fixed rental or lease arrangements — the supplier owns the machine and charges the premises operator a fixed rental or lease fee. The premises operator holds the keys to the machine and retains the machine takings. 

These are the main business models that have been identified and are not intended to describe every commercial arrangement in the sector. Some agreements may combine features of more than one model, involve multiple parties, use tiered or variable payment structures, or allocate responsibilities differently between the supplier and premises operator. We welcome evidence on these mixed or more complex arrangements.

Question 1: How are gaming machines owned and operated in your organisation or sector? Please describe the commercial arrangements used - for example, direct ownership, profit-share, fixed rental or lease, or a hybrid arrangement combining features of more than one model. For each arrangement, please explain who owns and maintains the machine, who holds the keys, who collects and controls the takings, how payments between the parties are calculated, who holds the records needed to calculate MGD, and who currently carries out the MGD obligations.

3. Why reform MGD liability?

The current MGD liability framework means that responsibility for the duty falls on whomever operates the premises where gaming machines are available for play. When MGD was introduced, liability was generally allocated to the holder of the relevant gambling, alcohol licence or permit for those premises, rather than the machine supplier or another person with a commercial interest in the machine, with specific rules for arrangements such as tenanted pubs. 

However, gaming machines are now supplied and operated through a range of commercial arrangements. In some cases, suppliers own and manage machines, control or share in the takings, and hold information relevant to calculating MGD. 

The reform will ensure that MGD liability remains fit for purpose and reflects how gaming machines are owned, supplied and operated today. By moving liability upstream to the businesses best placed to account for the duty, it will simplify administration and significantly reduce the number of taxpayers required to account for MGD.

Revised MGD liability by business model

Business Model	Current MGD liability	Typical arrangement	Future MGD liability
Direct ownership	Premises operator	The premises operator owns and operates the machine and retains the machine takings.	Premises operator (as machine owner)
Profit-share arrangement (revenue-split)	Premises operator	The supplier owns, installs and usually maintains the machine. Machine takings are shared between the supplier and premises operator under a commercial agreement. The supplier commonly holds the keys and empties the machine.	Supplier
Fixed rental or lease arrangement (fixed periodic fee, e.g. weekly)	Premises operator	The supplier owns the machine and charges the premises operator a fixed rental or lease fee. The premises operator commonly holds the keys, empties the machine and retains the machine takings.	Premises operator

The business models described above differ in who owns the machine, controls the takings and holds the information needed to calculate MGD. Reflecting these differences in liability rules will help ensure the duty is administered efficiently and proportionately. The change of liable person is underpinned by the principle that MGD liability should rest with the person best placed to comply with the duty. This will generally be the person who controls the machine takings and holds the information needed to calculate and pay the duty.  

Relevant factors may include ownership of the machine, control of machine takings, access to machine records, responsibility for paying winnings, and responsibility for calculating or providing information used for MGD purposes.

Question 2: Is the approach to determining who is liable for MGD sufficiently clear? In particular, are the concepts of control of machine takings, holding the information needed to calculate the duty, and profit-share arrangements clear and easy to apply in practice? If not, please explain where uncertainty may arise and how it could be addressed.

Question 3: The premises operator will remain liable under a fixed rental or lease arrangement where it controls the machine takings and holds the information needed to calculate the duty. Are there any circumstances in which this approach will not be workable? Please explain any exceptions that may be needed and how fixed rental or lease arrangements should be distinguished from profit-share arrangements.

Commercial arrangements may not always fit neatly within these categories and may change over time. Where an arrangement combines features of more than one model, liability may need to be determined by reference to the substance of the arrangement, including who controls the machine takings and has access to the information needed to calculate and account for MGD. We welcome views on the prevalence and operation of different business models and whether exceptions are needed for mixed or more complex arrangements.

Question 4: Does your organisation operate gaming machines under more than one commercial arrangement? If so, would the revised liability model create any practical difficulties in identifying which party is liable for MGD in each case? Please explain any hybrid arrangements you operate and any difficulties that may arise.

Question 5: Are you aware of any commercial arrangements not identified in this consultation that could present difficulties under the revised liability model? Please describe the arrangement, including who owns and maintains the machine, who controls or shares in the takings, how payments are calculated, who holds the relevant records, and whether these features change over time. Please explain why the revised approach may not work effectively and who will be best placed to account for MGD under the commercial arrangements in question.

Information and record keeping 

For information on current MGD obligations, including registration, calculating duty, filing returns and making payments, see the HMRC guidance.

Question 6: If your organisation became liable for MGD under the revised model, would it be able to complete returns and pay the correct amount of duty using the information it currently has access to or holds? If not, please explain what information is missing, who holds it, and what will be needed to enable accurate reporting and payment.

Reducing unnecessary administrative burdens 

As of September 2026, there are approximately 14,900 MGD registrations, of which around 13,500 (89%) are pubs and clubs, many of which have only one or two gaming machines and for which machine gaming is not their primary business activity. 

Under the current model, these businesses are required to register for MGD, maintain records, submit returns and comply with the tax, even where gaming machines form only a minor element of their overall business activity. This can create administrative burdens that are disproportionate to the scale of their machine gaming activity.

Question 7: What impacts will the revised liability model have on your business or sector? In your response please provide evidence, where possible, on: 

• changes in administrative or compliance burdens
• any one-off implementation or transition costs
• the effect on business processes, contractual arrangements or record-keeping requirements
• any unintended consequences or operational challenges

Question 8: What changes would your organisation need to make before the revised liability model is implemented in April 2028? Consider any accounting arrangements or organisational arrangements that might need to be made and how long it might take to implement those changes.

Supporting effective compliance and administration

Under the current rules, compliance risks and issues are disproportionately concentrated among smaller operators, particularly pubs, clubs and other premises where gaming machines form only a small part of the overall business.   

Compliance challenges associated with the current liability model include:  

• a significant number of liable persons fail to register for MGD or submit returns 
• unpaid debt is concentrated within these sectors 
• debt can arise where tenants cease trading or move premises without correctly deregistering 
• compliance activity can be resource-intensive relative to the amount of duty at risk 
• machine owners may be adversely affected by non-compliance by the current liable person. 

Moving liability for profit-share arrangements to suppliers will significantly reduce the risks and level of non-compliance by concentrating liability within a smaller population of businesses whose commercial activity is closely connected with gaming machine operations.

Question 9: Are there any issues that should be considered when transitioning to the revised liability model? Please explain any circumstances where responsibility for MGD may be unclear during the transition.

Supporting wider tax administration objectives 

The reform supports the government’s objectives to reduce burdens on businesses, improve compliance and modernise tax administration. It will remove MGD obligations from many businesses for whom machine gaming is a minor activity, while concentrating liability on those who are more closely involved in gaming machine operations and therefore better placed to meet their tax obligations.

Question 10: Are there any risks or unintended consequences arising from the revised liability model that the government should consider? Please explain how these might arise and any steps that could mitigate them.

4. Assessment of impacts

Exchequer Impact

Year	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
Exchequer impact (£m)	nil	nil	+20	+15	+15	+10

These figures have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2026.

Summary of impacts

Impacts	Comment
Economic impact	This proposal is not expected to have any significant macroeconomic impacts. The proposal affects who is liable to account for MGD rather than the overall level of gambling activity.
Impact on individuals, households and families	The proposal is not expected to have a direct impact on individuals, households or families.
Equalities impacts	No impacts on groups sharing protected characteristics have been identified at this stage.
Impact on businesses and Civil Society Organisations	The proposal is expected to affect businesses that host gaming machines under profit-share arrangements, as well as businesses that own and supply those machines. Under the reform, responsibility for registering, accounting for and paying MGD to HMRC would transfer from the business hosting the machine to the machine owner. As a result, businesses hosting gaming machines under profit-share arrangements may experience a reduction in administrative burdens associated with MGD compliance, including submitting returns and maintaining records for duty purposes. Machine owners would become responsible for registering for MGD, submitting returns, maintaining records and accounting for and paying the duty to HMRC. While the duty would continue to apply to the relevant machine takings, machine owners may incur additional administrative costs associated with taking on these compliance obligations. Around 14,900 businesses are currently registered for MGD. The proposal is expected to affect a subset of these businesses, together with the machine owners that would become liable for the duty. HMRC is seeking further evidence on the number and type of businesses affected, and on the scale of any one-off and ongoing business impacts arising from the reform.
Impact on HMRC or other public sector delivery organisations	The proposal is expected to have a positive operational impact for HMRC by making it easier to identify the person responsible for accounting for MGD and reducing compliance risks associated with current liability arrangements. This may improve the efficiency of compliance activity and reduce the scope for disputes over liability.
Other impacts	Other impacts have been considered and none have been identified.

5. Summary of consultation questions

Question 1: How are gaming machines owned and operated in your organisation or sector? Please describe the commercial arrangements used—for example, direct ownership, profit-share, fixed rental or lease, or a hybrid arrangement combining features of more than one model. For each arrangement, please explain who owns and maintains the machine, who holds the keys, who collects and controls the takings, how payments between the parties are calculated, who holds the records needed to calculate MGD, and who currently carries out the MGD obligations. 

Question 2: Is the approach to determining who is liable for MGD sufficiently clear? In particular, are the concepts of control of machine takings, holding the information needed to calculate the duty, and profit-share arrangements clear and easy to apply in practice? If not, please explain where uncertainty may arise and how it could be addressed.

Question 3: The premises operator will remain liable under a fixed rental or lease arrangement where it controls the machine takings and holds the information needed to calculate the duty. Are there any circumstances in which this approach will not be workable? Please explain any exceptions that may be needed and how fixed rental or lease arrangements should be distinguished from profit-share arrangements. 

Question 4: Does your organisation operate gaming machines under more than one commercial arrangement? If so, would the revised liability model create any practical difficulties in identifying which party is liable for MGD in each case? Please explain any hybrid arrangements you operate and any difficulties that may arise. 

Question 5: Are you aware of any commercial arrangements not identified in this consultation that could present difficulties under the revised liability model? Please describe the arrangement, including who owns and maintains the machine, who controls or shares in the takings, how payments are calculated, who holds the relevant records, and whether these features change over time. Please explain why the revised approach may not work effectively and who will be best placed to account for MGD under the commercial arrangements in question.

Question 6: If your organisation became liable for MGD under the revised model, would it be able to complete returns and pay the correct amount of duty using the information it currently has access to or holds? If not, please explain what information is missing, who holds it, and what will be needed to enable accurate reporting and payment.

Question 7: What impacts will the revised liability model have on your business or sector? In your response please provide evidence, where possible, on: 

• changes in administrative or compliance burdens 
• any one-off implementation or transition costs 
• the effect on business processes, contractual arrangements or record-keeping requirements 
• any unintended consequences or operational challenges

Question 8:  What changes would your organisation need to make before the revised liability model is implemented in April 2028? Consider any accounting arrangements or organisational arrangements that might need to be made and how long it might take to implement those changes.   

Question 9: Are there any issues that should be considered when transitioning to the revised liability model? Please explain any circumstances where responsibility for MGD may be unclear during the transition. 

Question 10: Are there any risks or unintended consequences arising from the revised liability model that the government should consider? Please explain how these might arise and any steps that could mitigate them.

6. The consultation process

Tax Policy Making principles

The following principles underpin the government’s approach to tax policy making:

• predictability and stability: the single major fiscal event cycle will provide a predictable and stable framework for the delivery of tax changes
• a smart and agile approach to consultation: the government will engage stakeholders fully and flexibly when developing tax policy, prioritising dynamic and frequent engagement with tax professionals at both ministerial and official levels — where formal consultation is required, it will be targeted and precise, only seeking information that is genuinely needed, and will last a proportionate amount of time
• transparency: the government is committed to transparency, and will make sure that its rationales for tax policy changes and assessments of policy impacts are clear

These principles will enable the government to deliver change quickly, whilst making sure that the impacts of tax policy changes are fully understood.

How to respond 

A summary of the questions in this consultation is included at chapter 5. 

Please use the online response form to respond to this consultation by 20 January 2027). 

Responses can be sent by e-mail to: mgd.consultation@hmrc.gov.uk.  

Please do not send consultation responses to the Consultation Coordinator. 

Paper copies of this document in Welsh may be obtained free of charge from the above address. 

When responding please say if you are a business, individual, or representative body. In the case of representative bodies please provide information on the number and nature of people you represent. 

Confidentiality  

HMRC is committed to protecting the privacy and security of your personal information. This privacy notice describes how we collect and use personal information about you in accordance with data protection law, including the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act (DPA) 2018. 

Information provided in response to this consultation, including personal information, 

may be published or disclosed in accordance with the access to information regimes. 

These are primarily the Freedom of Information Act 2000 (FOIA), the Data Protection 

Act 2018, UK General Data Protection Regulation (UK GDPR) and the Environmental Information Regulations 2004. 

If you want the information that you provide to be treated as confidential, please be 

aware that, under the Freedom of Information Act 2000, there is a statutory Code of Practice with which public authorities must comply and which deals with, amongst other things, obligations of confidence. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on HM Revenue and Customs. 

Consultation Privacy Notice  

This notice sets out how we will use your personal data, and your rights. It is made under Articles 13 and/or 14 of the UK General Data Protection Regulation. 

Your data  

The data controller for your personal data is HMRC. We will process the following personal data of individuals responding to this consultation:  

Name 

Email address 

Job title or organisation (if provided) 

Information and views provided in your consultation response 

Purpose 

The purpose(s) for which we are processing your personal data is: Machine Games Duty: changing who is liable for the duty consultation. 

Legal basis of processing  

The legal basis for processing your personal data is that the processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in a government department under Article 6(1)(e) of the UK GDPR. 

Recipients 

Your personal data will be shared by us with HM Treasury. 

As the personal data is stored on our IT infrastructure, it will be accessible to our IT service providers. They will only process this personal data for our purposes and in fulfilment with the contractual obligations they have with us.   

Retention  

Your personal data will be kept by us for 6 years and will then be deleted. 

Your rights  

You have the right to request information about how your personal data are processed, and to request a copy of that personal data. 

You have the right to request that any inaccuracies in your personal data are rectified without delay. 

You have the right to request that any incomplete personal data are completed, including by means of a supplementary statement.  

You have the right to request that your personal data are erased if there is no longer a justification for them to be processed. 

You have the right in certain circumstances (for example, where accuracy is contested) to request that the processing of your personal data is restricted. 

Contact HMRC or make a complaint  

Please refer to the HMRC Privacy Notice for how to contact us or make a complaint.  If you have any questions about this privacy notice or how HMRC handles your personal information, email the Data Protection Officer at: advice.dpa@hmrc.gov.uk 

Consultation principles  

This call for evidence is being run in accordance with the government’s Consultation Principles. 

The Consultation Principles are available on the Cabinet Office website: Consultation Principles Guidance  

If you have any comments or complaints about the consultation process, please contact the Consultation Coordinator. 

Please do not send responses to the consultation to this link.