HMRC moves to close free bet tax loopholes after Jumpman win

The proposed reforms would redefine promotional gaming offers and reduce the scope for future disputes over online gambling tax liabilities.

Key takeaways:

• HMRC has proposed changes to how Remote Gaming Duty applies to free bets and free spins.
• The reforms follow Jumpman Gaming’s successful appeal against a £3.2m tax assessment.
• “Freeplays” would be renamed “restricted plays” under the amended legislation. HMRC wants clearer tax treatment for promotional offers, tournaments and gaming prizes.
• The measures are due to take effect on April 1, 2027, if approved through Finance Bill 2026-27.

HMRC is seeking to rewrite key Remote Gaming Duty provisions covering free bets, free spins and promotional gaming offers following a tribunal defeat that erased a £3.2m tax bill for Jumpman Gaming. The proposed amendments to the Finance Act 2014 would establish new definitions for restricted plays, prizes and tournaments, while giving the tax authority greater clarity over how promotional products are taxed. The changes are intended to reduce disputes and safeguard future gambling tax revenues.

UK.- The UK government has proposed a change to how Remote Gaming Duty (RGD) is applied to free bets and free spins. A policy paper published by HM Revenue & Customs (HMRC) outlines plans to amend provisions of the Finance Act 2014 governing the taxation of promotional gaming offers in a move that comes just weeks after Jumpman Gaming won legal victory over a tax bill related precisely to this issue.

The operator successfully overturned a £3.2m tax liability with HMRC after the Upper Tribunal ruled in its favour on the treatment of promotional bets under existing legislation. As a result, HMRC is now seeking to revise the legal framework around what the Finance Act currently describes as “freeplays”, replacing the term with “restricted plays” and providing more detailed definitions for how such offers should be treated for tax purposes.

Under the proposed rules, operators offering tournaments and similar promotional arrangements would be affected by the updated legislation. The UK tax authority wants to clarify when a freeplay generated by another freeplay can be excluded from an operator’s RGD calculations. Specifically, a won freeplay could be excluded when it is used for remote gaming and does not generate any additional benefit for the player, such as another freeplay being awarded.

HMRC has also proposed changes to the definition of a prize. Under the amendment, an award would only qualify as a prize if it must be paid or provided under the published rules of a game. The revised definition could also mean that refunds made when a game is interrupted or terminated are treated as prizes in certain circumstances.

Another amendment would formally categorise participation in free-entry tournaments as involvement in a game of chance. The proposals would additionally grant HMRC commissioners broader powers to determine when a gaming payment is considered waived and when tournament entry payments should be disregarded for tax purposes.

The measures have been included within Finance Bill 2026-27 and are scheduled to come into force on April 1, 2027. According to HMRC, the objective is to establish clearer rules on the taxation of restricted plays, prizes and tournaments under RGD. The department argues that the changes will provide greater certainty for gambling operators, reduce the likelihood of disputes and safeguard tax revenues.

The timing of the proposals is particularly notable given the recent Jumpman Gaming ruling. In that case, the Upper Tribunal concluded that HMRC had incorrectly applied RGD to funds that had been re-wagered after being generated through promotional betting offers, resulting in the operator’s £3.2m tax assessment being overturned. The proposed amendments appear designed to avoid similar legal disputes in the future while providing greater clarity around the taxation of free bets, free spins and related promotional products.

In practical terms, the reforms would seek to maintain future tax revenues from online gaming by reducing uncertainty around how promotional offers are treated under RGD. They would also aim to prevent further tribunal challenges similar to the one that enabled Jumpman Gaming to successfully contest a multi-million-pound tax bill.

The proposal also comes just as chancellor John Healey’s Autumn Budget confirmed a five-percentage-point increase in Machine Gaming Duty in the UK, which is also set to come into force from April 2027. Remote Gaming Duty was hiked in last year’s Autumn Budget, rising to 40 per cent from April 2026.

FAQs

Why is HMRC changing the rules on free bets and free spins?

HMRC says the changes will provide clearer rules for taxing promotional gaming offers, reduce legal disputes and protect future tax revenues from online gambling.

What was the Jumpman Gaming case about?

Jumpman Gaming successfully challenged a £3.2m tax assessment after the Upper Tribunal ruled that HMRC had incorrectly applied RGD to funds re-wagered after being won through promotional offers.

What are “restricted plays” under the proposed rules?

Restricted plays would replace the term “freeplays” in legislation and cover promotional gaming products such as free bets and free spins, with clearer rules on their tax treatment.

When will the new RGD rules take effect?

The proposed changes form part of Finance Bill 2026-27 and are scheduled to come into force on April 1, 2027, alongside increases to General Betting Duty and Machine Games Duty.