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Machine Games Duty

Machine Games Duty (MGD) was introduced on 1 February 2013. It replaced Amusement Machine Licence Duty (AMLD).

This guide tells you what MGD is, how it works and what you need to do if it affects you.

IMPORTANT: You must make an MGD return and pay on time. There are penalties for missing the deadlines.

On the back of your MGD registration document you will find details of the months in which each of your accounting periods ends (four a year) - each accounting period ends on the last day of the month. After the end of each period, you need to make a return and pay what you owe by the last working day before 30 days has elapsed.

HMRC can help you to do this:

If you are an online MGD customer and you have given us your email address we will email you a reminder that your next return is due.

Our online service is quick and easy to use, however if you have chosen to file your returns on paper we will send you one by post at the end of each period. If you think you should have received a paper return but have not done so you should ring the Excise & Customs Helpline straightaway. You can't download a blank paper return from the internet.

On this page:

What is Machine Games Duty

MGD has replaced AMLD, and where MGD is payable you don't have to pay VAT on machine games.

MGD is charged on the playing of dutiable machine games where customers pay to play the games in the hope they will win a cash prize that's more than the cost to play the machine. MGD is not payable on machine games that only offer non-cash prizes or only cash prizes that are less than the cost to play.

A machine game is dutiable if both the following apply:

  • 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

MGD is not generally payable on the takings from machines where the play is:

  • at a not-for-profit event, for example an event that's held for charity (this exemption does not apply to play as part of the day-to-day activities of a not-for-profit organisation such as a club)
  • on lottery machines which meet the rules for Category B3A lottery machines - takings from these machines will also be exempt from VAT
  • in a tournament, which is a situation where players play against each other instead of playing against a machine and the winner gets a prize – for example, several players could compete against each other in a fruit machine tournament with the winner being the person scoring 3 lemons in the shortest time, or similar

Rates of MGD

There are two rates of duty for MGD:

  • lower rate at 5 per cent - the lower rate is for machines where the maximum cost per game on that machine (the 'maximum stake') is 20 pence, and the cash prize is £10.00 or less
  • standard rate at 20 per cent - the standard rate applies to any machine games subject to MGD, that aren't covered by the lower rate

This is an example of how you calculate what you owe.

Example - in accounting period 1, an operator has net takings of £100 from Type 1 machines and net takings of £200 from Type 2 machines.

MGD due is calculated as follows:

100 x 20% (MGD standard rate) = £20

200 x 5% (MGD lower rate) = £10

Total MGD due = £30

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


Who needs to register and pay Machine Games Duty

You'll need to register with HM Revenue & Customs (HMRC) for MGD and pay the duty if you hold the relevant licence or permit.

In Great Britain 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 - however in the case of a tenanted pub, where the licence is held by someone other than the tenant, the tenant will nevertheless be a person liable to register for MGD (club premises certificate granted under Part 3 of the Licensing Act 2003)

In Northern Ireland:

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

If there is no licence or permit

If no one holds a relevant licence or permit for the premises then one of the following must register:

  • a person required to hold a relevant licence or permit but who hasn't got one
  • the owner, lessee or occupier of 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, then all those listed above may be responsible for paying MGD.

If no one registers and HMRC are unable to establish who should be registered, then everyone who is entitled to a share in the profits from the machines may have to pay the duty on their share.

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


Registering for Machine Games Duty

About registration

If you have dutiable machine games you'll need to register for MGD with HMRC. You'll need to do this at least 14 days before any machines are available to be played.

The easiest and quickest way to register for MGD is online using the MGD Online Service. If you do not want to register online you can register by completing a form MGD1 which you will find in the forms section of this website.

Register for MGD

There may be times when HMRC will ask for security for payment of duty before they'll accept your application to register. If you're located outside of the UK, HMRC might not accept your registration unless you have a tax representative in the UK.

HMRC can issue a registration notice when they have evidence to suggest there is failure to register for MGD. 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.

Information on appealing to HMRC

Group registration

Two or more corporate bodies (that is companies or partnerships incorporated through Companies House), can ask to be registered as a group. This is usually allowed so 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 needs to take on the role of group representative. The group representative will be expected to make returns and submit payment on behalf of the group.

All members of the group will be 'jointly and severally liable' for MGD payable to HMRC. This means that HMRC can ask any one member of the group to pay MGD due, although HMRC are only likely to do this if the group representative doesn't pay.

How to register for Machine Games Duty

You can register online using HMRC's MGD Online Registration Service.

The online system is:

  • secure
  • quick - forms take less time to fill in and there are no postal delays
  • easy - due to the on-screen help that guides you through the process
  • more certain, because you get an immediate on-screen acknowledgement that HMRC has received your application

Information you'll need to hand before you register:

  • 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 (NINO), Unique Trader Reference (UTR) or VAT Registration Number (VRN) where appropriate

If you don't have a licence or permit, HMRC will need details of all the premises that you want to register for.

Once HMRC has accepted and processed your online application, you'll be placed on the MGD register and receive your MGD registration number. You'll be able to view it online and a copy will be sent to you in the post.

If you prefer not to use an online system, you can download the registration form from the HMRC website and send it to HMRC by post.

Once HMRC has accepted and processed your application you will receive your MGD registration number by post.

Register for MGD

Find more information about registering online for MGD

Changes to your MGD registration

You must tell HMRC if there are changes to what you told us about your business when you registered. For example, you’ll need to tell us about any change of address or if you stop providing machine games for play.

You can go to the MGD online service and amend your registration details or write to HMRC.


You can appoint an agent to deal with your MGD affairs. The MGD for agents service enables agents 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 will not discuss your personal or financial information with an agent if they haven't been authorised.

For more information about agents go to Tax agents and advisers

The MGD register

When your registration application is accepted, HMRC will add your name to the MGD Register. The register is publically available - people wanting information about who is registered for MGD can put in a postcode and find all the registered addresses at that postcode. This means that anyone who has concerns about MGD liability if no one is registered, or is a profit sharer, can check whether someone they are considering entering into a business arrangement with is registered for MGD.

The register is free to view.

Search the Machine Games Duty (MGD) Register


Making changes to your Machine Games Duty registration

You must tell HMRC if any information supplied on your application for registration changes or is wrong.

For example, you'll need to tell HMRC about any change of address.

How to tell HMRC about changes

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 the:

National Registration Unit
HM Revenue & Customs
Portcullis House
21 India Street
G2 4PZ

You must use your registration number on any correspondence.


Deregister for Machine Games Duty

You will need to deregister if you:

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

You can tell HMRC up to three months before you want the deregistration to take effect.

Important note: If you are a seasonal trader you do not 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).

How to cancel/deregister for Machine Games Duty

If you registered online you can deregister online. You'll need to log into HMRC online services (enter your User ID and password) and you'll be able to access your MGD online account. From your MGD 'At a glance' page you'll need to select 'Change Registration Details'.

Deregister for MGD

If you registered for MGD on paper, you can deregister by writing to the:

National Registration Unit
HM Revenue & Customs
Portcullis House
21 India Street
G2 4PZ

Your letter should include the following information:

  • your registration number
  • the reason why you want to deregister (for example you are ceasing to trade) and the date from which deregistration should take effect.

HMRC will remove your name from the MGD Register within 14 days of when they get your request to deregister (or on the date you asked for deregistration to take effect if you asked to deregister from a specific date). HMRC will write to you to confirm your deregistration.

Important note: HMRC will issue a return for any whole or part accounting period immediately before your deregistration if they have not had a return from you for that period. You will need to complete this return and pay anything you owe.


Record keeping

You'll need to keep records for MGD and you'll need to show that the amount of MGD you've paid is the right amount.

Good record keeping is essential. If you don't keep the right records then you could face penalties - and if your records are clear and contain all the right information, HMRC will find that checking them is straightforward.

Revenue traders

If you're liable to pay MGD then you're a 'revenue trader'. Revenue traders must keep certain records and these are fully explained in Notice 206.

If you're registered for VAT then your records may contain information that's also needed for MGD purposes. If your records are cross-referenced, there is a clear link between them (an audit trail) and they are easy to follow, then HMRC doesn't expect you to duplicate your records. However, you do need to know that separate record keeping rules apply for VAT and you can find out more in Notice 700 'The VAT Guide', and Notice 706 'Partial Exemption'.

Find out more about revenue traders in Notice 206

The VAT Guide

Partial Exemption

Excise Duty Account

Everyone registered for MGD must keep an Excise Duty Account. This must show all the information needed to complete each MGD return, and how the figures on the return have been calculated. HMRC doesn't specify how you keep your records but they must contain all of the information you've used to complete your returns.

Other records you need to keep

You'll need to keep records that show:

  • the date and times when your machines are in use
  • the details of any changes to your machines
  • details of any third party arrangements
  • how you account for the cash in and out of the machines
  • payouts to customers
  • trading and profit and loss accounts
  • balance sheets
  • bank statements
  • records used for completing MGD returns
  • any additional records and documents relevant to the business of providing dutiable machine games for play

You can read more about the records you need to keep in Notice 452

Storing records and accounts

You need to keep all of your MGD records for 4 years. Records and accounts are normally kept at the main place of business, but you can keep your records somewhere else if you need to.

HMRC might ask to see your records at your main place of business or where your business is registered. They have the legal right to check your duty calculations and take copies of any books, accounts, records or other paperwork relating to your business.


Calculating Machine Games Duty

If a machine offers a game where you can win both cash and non-cash prizes, then the amount of the cash prize determines whether MGD is due or not. If the cost to play the game is less than the biggest cash prize that could be won then MGD is due.

If a machine offers several games, some of which are dutiable machine games and some of which are not (for example, you can't win a cash prize and might be played for fun), then MGD will be due on the dutiable machine games but not the non-dutiable games. The non dutiable machine games may be subject to VAT.

Machines won't be affected by MGD if the only prizes offered are non-cash prizes (for example crane-grabs offering only non-cash prizes). Redemption machines won't be affected by MGD if the redemption tickets can't be exchanged for cash, and no cash prizes are on offer from the machine alongside redemption tickets. These machines will still be affected by VAT.

Working out your takings

MGD is due on the total net takings from the playing of dutiable machine games. Net takings means what is charged to play the games less the amount paid out as winnings.

You can treat as winnings (and deduct from MGD liability) the VAT inclusive cost of non-cash prizes given out for play on machines subject to MGD (that is machines which also offer a cash prize more than the cost to play the game). In this case, you must not deduct the value of non-cash prizes until they are actually given out to the winners.

If you don't know the exact value of non-cash prizes given out for play on machines subject to MGD, perhaps because you have a single stock of non-cash prizes and you use some for dutiable games and some for non-dutiable games, then you can use a reasonable estimate.

If a machine offers both dutiable machine games and other activities (for example 'just for fun' games that don't offer a prize), the net takings from playing of the dutiable machine games will be subject to MGD and the remainder subject to VAT.

Everything that is a 'free play' won't be included in the calculation of net takings. When you're working out your net takings you can still take away winnings from these plays.

You can carry across a negative net duty liability to the next (and future) return periods, but you can't get a refund for it.

If you can't work out your MGD

In certain circumstances, if you can't give exact figures, you can use an apportionment (that is a reasonable 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 the accounting period and you can't calculate what the takings were before and after the change
  • there is a good reason why you can't calculate exactly which takings came from both standard and lower rated machines games or from dutiable machine games and non-dutiable activities
  • the type of dutiable machine game you offer to customers during the accounting period changes - for example, from a lower to a higher rated dutiable machine game and you can't calculate exactly how much of the takings were from before, or after, the change
  • you can't calculate exactly the value of a non-cash prize (for example, because you bought prizes in bulk and some were used in non-dutiable machines)

HMRC may wish 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.


Returns and payments


Once you're registered for MGD you must send HMRC regular returns and payments.

The standard accounting period will be three calendar months.

Your MGD return should be with HMRC no later than the last working day before 30 days have elapsed after the end of the accounting period. It will need to give details of the net takings from dutiable machine games

In the case of groups, a return to cover all group members should be submitted by the group representative member.

When you register, you will have the opportunity to ask HMRC to use different accounting periods. Non-standard accounting periods must start and end within 16 days of what would have been the standard accounting period and as a result may be of unequal lengths.

If you do not apply for different accounting periods, or we cannot agree to your request, you must use the standard accounting periods. If we refuse to allow you different accounting periods, you can appeal against our decision.

Online returns

Once you have signed up to use HMRC's MGD Online Service you'll be able to submit any subsequent returns online. If you complete your returns online you'll have access to online help which will make it easier to complete. If you provide your email address HMRC will send an email prompt when your return is due. You can also keep track of your MGD affairs by accessing details of previously submitted returns and payments.

Find out how to submit your Machine Games Duty return online

Paper returns

If you have not signed up to use HMRC's MGD Online Service, you will need to submit a paper return (MGD 6). HMRC will issue a paper return after the end of each accounting period and this must be sent to HMRC no later than the last working day before 30 days have elapsed after the end of the accounting period. You can’t download a blank return on the internet.

Find out more about the deadlines for returns and payments below.

Important: If you registered for MGD on paper and would like to complete an online return, but you haven’t signed up to use HMRC’s MGD Online Service you’ll need to sign up and enroll for MGD.

If you are a 'new user' and signing up to use HMRC Online Services for the first time (or if you have an existing Government Gateway account as an 'Individual') you will need to create an HMRC online account.

Find out how to submit your Machine Games Duty return online

Sign up for HMRC’s Online Services to submit your return online

More information about duty returns

Accounting for Machine Games Duty - what do to if you weren't registered by 1 February 2013 (PDF 38K)


You’ll be able to pay MGD electronically by:

  • Direct Debit - Variable Payment and Single Payment Plans
  • Bacs Direct Credit
  • Faster Payments by online or telephone banking

Find out more about how to pay MGD


Deadlines for your Machine Games Duty return and payment

When you register for MGD using the MGD Online Service you will be invited to select the accounting periods you would prefer. The accounting periods you are given will be shown on the reverse of the registration letter sent to you by HMRC. This letter will be posted to you and you will also be able to view and print a copy from your MGD Online Service page.

Important note: Please provide your email address when you register for MGD so that HMRC can issue an email reminder when your return is due.

If you register on paper, HMRC will tell you by letter, what your MGD registration number is. The dates of your accounting periods will be shown on the reverse of the letter. HMRC will send you a paper return after the end of each accounting period and this must be sent to HMRC by the last working day before30 days have elapsed after the end of the accounting period.

Your MGD return and payment are due by the last working day before 30 days have elapsed after the end of each accounting period. So, if the 30th day after the end of your accounting period falls on a weekend or bank holiday, your return and payment must be with HMRC on or before the last working day before then.

For example, the first accounting period for operator 'A' ends on 31 May 2013. He notes that returns and payments are usually due 30 days after the end of each accounting period. As 30 June 2013 is a Sunday, operator 'A' applies the rule that 'if the 30th day after the end of an accounting period is a weekend or bank holiday any payments must be due on the last working day before the 30th day'. Operator 'A' calculates his return and payment are due on 28 June 2013 (a Friday).

The table below shows the return and payment deadlines for the tax year 2013/14
Accounting period ending Deadline for MGD return and payment
31 March 2013 30 April 2013
30 April 2013 30 May 2013
31 May 2013 28 June 2013
30 June 2013 30 July 2013
31 July 2013 30 August 2013
31 August 2013 30 September 2013
30 September 2013 30 October 2013
31 October 2013 29 November 2013
30 November 2013 30 December 2013
31 December 2013 30 January 2014
31 January 2014 28 February 2014
28 February 2014 28 March 2014

How to pay MGD

HMRC recommends that you pay MGD electronically. You'll be able to pay MGD electronically by:

  • Direct Debit - Variable Payment and Single Payment Plans. When a Direct Debit has been set up with your bank, payments will be made automatically for you in the future.

Other ways to make payments are by:

  • Bacs Direct Credit
  • Faster Payments by online or telephone banking

Paying electronically is fast, secure and convenient provided you use the correct MGD reference number. It is your responsibility to ensure that payments are made on time, whichever payment method you use. Remember, you may be charged interest and a penalty if your payment is not received by the deadline.

Find out more about how to pay MGD


Machine Games Duty assessments for not submitting your return

You have a legal obligation to submit your MGD return and pay any MGD you owe to HMRC by the due date. If this date has passed and you haven't submitted your return, HMRC will calculate what you owe using the best information available to them. This calculation is called an 'assessment'.

What to do if you receive a Machine Games Duty assessment

If you haven't submitted your MGD return on time, HMRC may issue a notice of assessment which will include a pay slip and details of how to pay.

You need to take immediate action. You should submit your return and make any payment due straight away, otherwise you must pay the assessment within 30 days of the date on the assessment.

If the assessment is too low

If you think the amount of the assessment is lower than the amount of MGD you owe, you must tell HMRC. You can do this by submitting your MGD return with payment for the higher amount.

If you do not tell HMRC that an assessment is too low within 30 days of the assessment you may be charged a penalty or you may be liable to prosecution.

If you tell HMRC that the assessment is too low but you do not submit a return, HMRC will make a further assessment for the additional MGD due and let you know about any penalty or interest you may have to pay.

If the assessment is too high

If you think the assessment is too high you should submit your overdue return showing the correct amount of MGD you owe, and make any payment that's due. You cannot appeal against an assessment on the basis that it is too high.

What to do if you can't pay

If you are not able to pay the MGD you owe, it's very important to contact HMRC as soon as possible to explain your situation. You should still submit any overdue returns.



There are a number of situations where you might receive a penalty:

  • if you make a dutiable machine available for play and you don't register for MGD
  • if you don't send in your MGD returns on time
  • if you don't pay the MGD that you owe
  • if you make a mistake on your return

Penalties for failure to file and pay MGD returns on time

More information about MGD and penalties

Find out about penalties for returns and documents that are wrong (PDF 569K)

What happens if you don't tell HMRC that you need to pay tax 'failure to notify' (PDF 304K)


Machine Games Duty and VAT

Machine games that you pay MGD on will be exempt from VAT, and businesses registered for VAT might become either fully exempt or partially exempt. This means you may not be able to claim all or some of the input tax on your purchases.

If you're registered for VAT, you should read the guidance relating to VAT and exemption as your VAT calculations may be affected. The rules for VAT will be amended to show these changes.

MGD and VAT Excise Information Note 03/12

Read about VAT and exempt and partially exempt businesses


Help and support

If you've questions about MGD, you can contact the Excise and Customs helpline, or email your question to them


More useful links

Machine Games Duty Notice 452

Amusement Machine Licence Duty - Machine Games Duty transition

Find out how to submit your Machine Games Duty return online

Find more information about registering online for MGD