Business tax – guidance

Machine Games Duty

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


Machine Games Duty (MGD) is a tax on gaming machines. It replaced both Amusement Machine Licence Duty and VAT charged on the income from these machines.

MGD is charged when customers pay to play machine games to win a cash prize that’s more than the cost to play the machine. MGD isn’t payable on machine games that only offer non-cash prizes or cash prizes that are less than the cost to play.

Find details of all the MGD exemptions.

You’ll need to pay MGD on a machine game if both the conditions below are met:

  • the prize - or at least one of the prizes that can be won - is cash, or includes cash
  • at least one of the cash prizes is bigger than the smallest amount that’s paid to play the game

If MGD applies to you it’s important that you complete an MGD return and pay on time. There are penalties for missing the deadlines.

Register for MGD

If you own machine games that are liable for MGD, you’ll need to register with HM Revenue and Customs (HMRC) and pay what you owe.

You’ll need to register at least 14 days before any machines are played.

Use the MGD Online Service to register for MGD.

If you don’t want to register online you can register by completing form MGD1 Machine Games Duty - Application to register a business.

Before you register, you’ll need information on:

  • the type of business you run
  • the number of machines you have
  • business address
  • any correspondence address that is not the business address
  • other references, for example National Insurance Number, Unique Trader Reference or VAT registration number where appropriate

Once HMRC has accepted and processed your online application, your name will be added to the MGD register and you’ll receive your MGD registration number by post.

Sometimes HMRC will ask you for security for payment of duty before they’ll accept your application to register. If you’re outside the UK, HMRC might not accept your registration unless you have a tax representative in the UK.

Compulsory registration

If HMRC suspects you have machine games ready for play that you should have registered, they can consider compulsory registration. Before doing this they’ll issue a ‘registration notice’ listing all your sites for which compulsory registration is being considered.

If you don’t agree with this, you can ask HMRC to reconsider their decision. You have the right to appeal within 30 days of the registration notice. If you can’t prove to HMRC that you don’t need to register, or you don’t appeal within the time limit, HMRC can register you from the date of the registration notice.

Who should register

The person who holds the relevant licence or permit is responsible for registering with HMRC.

In England, Scotland and Wales the relevant licences or permits 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
  • club premises certificate granted under Part 3 of the Licensing Act 2003

In the case of a pub, where the licence is held by someone other than the tenant, the tenant will still be the person liable to register for MGD.

In Northern Ireland the relevant licences or permits are:

  • registration certificate including a club registration certificate
  • bookmaking office licence
  • bingo club licence
  • amusement permit
  • licence allowing the serving of alcohol

Who should pay if there’s no licence or permit

If you don’t have a licence or permit, HMRC will need details of all the premises that you want to register. The person who gives details must be either:

  • the person required to hold the relevant licence or permit
  • the owner, occupier or person leasing the premises
  • someone responsible for the management of premises
  • someone responsible for controlling the use of machine games
  • someone responsible for controlling admission to the premises, or providing goods and services to people who are let in

If no one registers, and HMRC can’t confirm who should be registered, everyone who is entitled to a share in the machine profits may have to pay MGD on their share.

If the machine games are on a stall at a travelling fair, either the stallholder or the person in charge of the fair must register and pay MGD. If neither of them registers then both may be responsible for paying.

Group registration

Two or more corporate bodies (companies or partnerships incorporated through Companies House), can be registered as a group as long as all the proposed members:

  • are corporate bodies
  • have a controller in common - for example, they are under the same holding company
  • are in the UK or have a place of business in the UK
  • have agreed to be part of the group

One group member should act as group representative, who should send returns and submit payment on behalf of the group.

All members of the group will be ‘jointly and severally liable’ for paying MGD to HMRC. This means that HMRC can ask any one member of the group to pay any MGD due, although this will only happen if the group representative doesn’t pay.


You can appoint an agent to:

  • set up client authorisations online
  • make changes to clients’ MGD registrations (change of premises and address)
  • view clients’ accounts
  • submit returns on their clients’ behalf

HMRC won’t discuss your personal or financial information with an agent if they haven’t been authorised.

The tax agents and advisers pages give more information.

The MGD register

When your registration application is accepted, HMRC will add your name to the MGD register. The register can be viewed by anyone wanting information about who is registered for MGD. You can put in a postcode and find all the registered addresses at that postcode.

This means that if you have concerns about MGD liability, you can check whether someone you are considering entering into a business arrangement with is registered for MGD. The register is free to view.

Calculating your MGD

MGD is due on the total net takings from your machine games for which duty is payable. Net takings means what’s charged to play the games minus the amount paid out as winnings.

Winnings includes the cost of non-cash prizes given out on machines that are subject to MGD. If you don’t know the exact value of the non-cash prizes, you can use a reasonable estimate.

If a machine offers both dutiable machine games and others - for example ‘just for fun’ games that don’t offer a prize – MGD will be due on the net takings and the rest will be subject to VAT.

If you can’t give exact figures, you can sometimes use an ‘apportionment’ - that’s an estimate - as long as it’s been based on a reasonable method.

HMRC might accept the following reasons for apportionment:

  • the rate of duty changed during your accounting period and you can’t calculate what the takings were before and after the change
  • you have a good reason why you can’t calculate exactly which takings came from standard and which from lower rated machines games, or from games liable to duty and those which are not
  • the type of machine game you offer to customers during the accounting period changes - for example, from a lower rated machine game to a higher rated one - and you can’t work out which period the takings were from
  • you can’t calculate the exact value of a non-cash prize - for example, because you bought prizes in bulk and some were used in machines that are not liable to duty

HMRC may want to check that you have good reason for not being able to provide exact figures and that the apportionment method you are using produces a reasonable and fair result.


There are 3 rates of duty for MGD:

  • lower rate 5% - for machines where the maximum cost per game (the ‘maximum stake’) is 20 pence, and the cash prize is £10 or less. These will be called ‘Type 1’ machines
  • standard rate 20% - applies to machines where the highest charge to play a game can be more than 20p but not more than £5, or the highest cash prize for a game is higher than £10. These will be called ‘Type 2’ machines
  • higher rate 25% - applies to machines that are not Type 1 or Type 2 machines. In effect, any machine where it can cost more than £5 to play a game

Example of how to calculate MGD

In accounting period 1, an operator has net takings of £100 from standard rate machines and net takings of £200 from higher rate machines.

100 x 20% (MGD standard rate) = £20
200 x 25% (MGD higher rate) = £50
Total due = £70

If a machine has several games and one or more is subject to the higher rate, all of the games on that machine are then subject to that rate. This applies whether or not some of them would normally be charged at the lower or standard rate and regardless of whether anyone actually plays the lower or standard rated games.

Read section 13 of Notice 452 Machine Games Duty for more detail about working out how much MGD you need to pay.

Returns and payments


You must send HMRC regular returns and payments.

The standard accounting period is 3 calendar months. You can ask HMRC for a non-standard accounting period, but it must start and end within 16 days of what would have been your standard period.

If you don’t apply for a different accounting period, or HMRC can’t agree to your request, you must use the standard accounting periods. If HMRC refuses to allow you a different accounting period, you can appeal against the decision.

Your return should be with HMRC no later than 30 days after the end of your accounting period. It will need to give details of your net takings from dutiable machine games. If the 30th day is on a weekend or bank holiday, your return and payment must be with HMRC on by the previous working day.

For groups, the group representative member should send a return to cover all group members.

Online returns

If you’ve signed up to use the MGD Online Service you’ll be able to submit your returns online. If you give your email address HMRC will send you an email to let you know when your return is due. You’ll also be able to access details of returns and payments you’ve submitted.

Paper returns

If you’re not using the MGD Online Service, you’ll need to send a paper return form MGD 6. HMRC will send you a MGD 6 return after the end of each accounting period. You can’t download the return online. Find more about duty returns in section 14 of Notice 452 Machine Games Duty.


You can pay MGD in a number of ways, but you must make sure you pay on time.

If your payment isn’t received by the deadline you could be charged interest and a penalty.

Return and payment deadlines for the tax year 2014 to 2015

Accounting period ending Deadline for return and payment
30 October 2014 28 November 2014
30 November 2014 30 December 2014
31 December 2014 30 January 2015
31 January 2015 2 March 2015
28 February 2015 30 March 2015
31 March 2015 30 April 2015
30 April 2015 29 May 2015
31 May 2015 30 June 2015
30 June 2015 30 July 2015
31 July 2015 28 August 2015
31 August 2015 30 September 2015
30 September 2015 30 October 2015
31 October 2015 30 November 2015
30 November 2015 30 December 2015

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

Penalties and appeals

You could be charged a penalty if:

  • you don’t register for MGD when you should have
  • you don’t send in your return and payment on time
  • you fail to tell HMRC of any business changes at the right time
  • your return or other tax document isn’t accurate and as a result you don’t pay enough duty
  • you fail to tell HMRC a duty assessment sent to you is too low

Find out more about penalties you may have to pay HMRC.

If you’ve been given a penalty and you think it’s wrong, you can send an appeal to HMRC.

Changes to your details

You must tell HMRC if any information you gave on your application for registration changes or is wrong. For example, you’ll need to tell HMRC about any change of address.

If you registered for MGD online you can make the changes through the MGD Online Service. If you registered on paper, you can send the new or correct information in writing to:

HMRC National Registration Unit

Portcullis House
21 India Street

G2 4PZ

You must include your registration number on any correspondence.


You can cancel your MGD registration if you:

  • cease trading
  • no longer provide machine games for play
  • wish to join a group or a partnership

You can tell HMRC up to 3 months before you want to cancel your registration.

Find out more about deregistration.

If you’re a seasonal trader you don’t need to deregister at the end of each season. However, you still need to submit a return for every period, even if the return shows you don’t owe anything (a nil return).

If you’ve registered online you can also deregister online.

Record keeping

You’ll need to keep accurate records for MGD to show:

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

You should keep your records for 4 years as HMRC might ask to see them. They have a legal right to check your duty calculations and take copies of any books, accounts, records or other paperwork relating to your business.

If you don’t keep the right records you could face penalties.

Revenue trader

If you’re a ‘revenue trader’ you must keep specific records, which are fully explained in Notice 206 Revenue traders records.

Record keeping for VAT

Separate record keeping rules apply for VAT, so if you’re registered for VAT your records may also contain information that’s needed for MGD. HMRC doesn’t expect you to duplicate your records, but suggest you cross-reference your records so there’s an audit trail. Find out more in Notice 700 The VAT Guide and Notice 706 Partial Exemption.

You must keep a record of all the information you used to complete your MGD return and how you worked out the figures. HMRC doesn’t specify how you should keep your records, but they must contain all the relevant information.

Find out more in Notice 452 Machine Games Duty.


Machine games that you pay MGD on will be exempt from VAT. Businesses registered for VAT might become either fully exempt or partially exempt. If you’re registered for VAT, find out more about MGD and VAT.

Notice 701/29 betting, gaming and lotteries also explains about VAT and MGD.