Business tax – guidance

Machine Games Duty

Find out how to register for Machine Games Duty (MGD), how much you’ll have to pay and your other responsibilties.


MGD is a tax you need to pay on your machine games if at least one of the prizes on offer is cash, and it’s more than the smallest cost to play the machine.

If MGD applies to you, you’ll need to register and complete regular returns. You must also pay any tax due on time.

If your machines only offer non-cash prizes or cash prizes that are less than the cost to play, there’s no MGD to pay, but you might still have to pay VAT.

Details of all the exemptions are in Notice 452.

MGD Register

There is a public list of all MGD registrations available online.

This is free to make a registration enquiry.

Register if the premises have a licence or permit

England, Scotland and Wales

If you hold the licence or permit for the premises where the machine games are played, you’ll be responsible for registering.

The relevant licenses are:

  • premises licence for gambling activities under the Gambling Act 2005
  • family entertainment centre gaming machine permit
  • club gaming permit
  • club machine permit
  • prize gaming permit
  • Licensing Act (England and Wales) 2003 premises licence for sales of alcohol, and the equivalent under the Licensing (Scotland) Act 2005 - but if you hold the licence for a tenanted pub, the tenant should register
  • club premises certificate granted under Part 3 of the Licensing Act 2003

Northern Ireland

You should register if you hold one of these licences or permits:

  • registration certificate including a club registration certificate
  • bookmaking office licence
  • bingo club licence
  • amusement permit
  • licence allowing the serving of alcohol - but if you hold the licence for a tenanted pub, the tenant should register

If the premises don’t have a licence or permit

If you’re the person responsible for holding the relevant licence or permit, you’ll have to pay any MGD that’s due.

If the premises don’t need to have a licence on permit, the person that needs to register and pay MGD will be:

  • the owner, occupier or person leasing the premises
  • the person responsible for the management of premises
  • the person responsible for controlling the use of machine games
  • the person responsible for controlling admission to the premises, or providing goods and services to people who are let in
  • the stallholder or person in charge of a travelling fair where machine games are on a stall

If no one registers, HMRC can ask anyone on this list to pay the tax owed.

When and how to register

You should register at least 14 days before your machines are available for play.

You can register using the MGD Online Service or by post using form MGD1.

When you register you’ll need to give:

  • details of the type of business you run
  • the number of machines you have
  • your business address
  • a correspondence address if this is different from the business address
  • other references, for example National Insurance Number, Unique Taxpayer Reference or VAT registration number

Once HMRC accept your registration application, you’ll receive your MGD registration certificate (including your registration number) in the post.

Compulsory registration

If you don’t register when you should, HMRC can compulsorily register you. You’ll receive a ‘registration notice’ showing the premises HMRC are considering registering.

You can appeal if you don’t agree with this notice.

If you don’t appeal or your appeal isn’t successful, HMRC will compulsorily register you from the date of the ‘registration notice’, unless someone else has registered in the meantime.

Register as a group

You can register as a group if all of the group members are corporate bodies (eg limited companies) and are all controlled by the same person or company.

If you want to register as a group, the group representative must:

  • complete the registration application
  • provide details of all the group members
  • send returns and make payments on behalf of the group

All of the group members must:

  • be in the UK or have a place of business in the UK
  • have agreed to be part of the group

Appoint an agent

You can appoint an agent to act on your behalf.

You must authorise your agent before HMRC will talk to them about your personal or financial information.

Work out how much you have to pay

MGD is due on your total net takings from play on your machine games.

That’s what you charge to play the games minus the amount you pay as winnings, including non-cash prizes.

Sometimes you’ll have a good reason for not being able to correctly work out what you owe for different parts of your takings.

Where this happens you can use a reasonable estimate, known as an apportionment.

You might be able to use an apportionment where:

  • you change the type of your machine game during an accounting period, for example from a lower rated to a standard rated machine
  • your machine has more than one type of game, for example it has lower rated and standard rated games and also includes games that don’t offer a prize
  • you pay out a non-cash prize and you bought prizes in bulk and used these for some machines not liable for MGD

You must have a good reason for not being able to provide exact figures and you’ll need to show that the apportionment method you’re using is reasonable.


There are 3 rates of duty:

Machine Type Cost to play Prize Rate
Type 1 - lower rate 20 pence or less £10 or less 5%
Type 2 - standard rate 21 pence to £5 £11 or more 20%
All others - higher rate More than £5 Any 25%

If your machine has games of more than one type, the rate for all the games will be the highest rated game. For example, machines with both standard and higher rated games will be charged at 25%.

Example of how to work out your MGD

In accounting period 1, you have net takings of £100 from standard rate machines and net takings of £200 from higher rate machines.

100 x 20% (standard rate) = £20

200 x 25% (higher rate) = £50

Total due = £70

If you don’t owe MGD

If you work out you don’t owe anything you must still complete a return and enter a value of ‘0’ in all boxes. More about working out how much you need to pay.

When and how to submit your return and payments

You must submit your return and make your payment within 30 days of the end of your accounting period. If the 30th day is on a weekend or bank holiday, your return and payment should reach HMRC by the last working day before then.

You can submit your returns online and if you give your email address you’ll receive an email telling you when your return is due.

If you haven’t registered online, HMRC will send you a paper return after the end of each accounting period.

You can pay in several ways, but you must make sure you pay on time or you could be charged interest and a penalty.

If you miss your payment deadline and haven’t sent your return, HMRC can work out what you owe using the best information available. This is called an ‘assessment’.

Penalties and appeals

You may have to pay a penalty if:

  • you don’t register for MGD when you should
  • your return is late
  • your payment is late
  • you don’t tell HMRC about any business changes at the right time
  • you give HMRC wrong information which means you don’t pay enough tax
  • you don’t tell HMRC that a duty assessment sent to you is too low
  • you don’t keep the right records

Find more about penalties.

If you think a penalty you’ve been given is wrong, you can appeal.

Changes to your registration details

You must report any changes to your registration details.

If you registered online you can make changes using the MGD Online Service.

If you registered using form MGD1, you can make your changes by writing to:

HMRC National Registration Unit
Portcullis House
21 India Street
G2 4PZ

You must include your registration number.

Cancel your registration or deregister

You should cancel your registration and deregister if you:

  • stop trading
  • no longer provide machine games for play
  • want to join a group or a partnership

You can tell HMRC up to 3 months before you want to deregister.

If you’re a seasonal trader you don’t need to deregister at the end of each season.

However, you’ll still need to submit a return for every period, even if the return shows you don’t owe anything.

You can deregister online.

Records you need to keep

You need to keep accurate records to show:

  • how you worked out the figures for your return
  • that the amount you’ve paid is correct

Keep your records for 4 years as HMRC might ask to see them.


If you pay MGD on your machine games they will be exempt from VAT.

More about MGD and VAT.