Paying Machine Games Duty: file and pay within 30 days of the quarter end

Businesses operating dutiable gaming machines need to file a Machine Games Duty return and pay the amount due after each accounting period. The tax uses a dedicated 14-character reference beginning with X and has payment methods and deadlines separate from ordinary VAT or PAYE.

The normal accounting period is three months

GOV.UK says Machine Games Duty returns are normally filed every three months and both the return and payment are due within 30 days after the end of the accounting period. Businesses can have different arrangements where HMRC agrees.

Keep machine takings records throughout the period rather than calculating from bank deposits at quarter end. Cash removed from machines and cash banked are related but not identical measures of net dutiable takings.

2026 to 2027 rates remain 5%, 20% and 25% depending on machine type

HMRC's April 2026 rates show a 5 percent lower rate, 20 percent standard rate and 25 percent higher rate based on the machine's cost to play and prize characteristics. A machine offering multiple game types can be charged at the highest applicable category.

Tag each machine correctly in the accounting records. The tax calculation should reconcile to machine takings and configuration, not merely the total cash counted from the premises.

Use the 14-character Machine Games Duty reference beginning with X

HMRC says bank and card payments need the 14-character Machine Games Duty payment reference beginning with X shown on the online account or registration certificate.

Store the reference with the MGD registration record, not in an employee's personal banking template. Using the wrong HMRC reference can leave the duty appearing unpaid even where money left the business account.

Faster Payments, CHAPS and Bacs are supported

HMRC currently supports online or telephone bank transfer. Faster Payments usually arrive same or next day, CHAPS normally same working day within bank processing times, and Bacs normally takes three working days.

Check transaction limits and the actual 30-day deadline before choosing the rail. If the deadline falls on a weekend or bank holiday, HMRC's rules vary by method, so use the current payment page rather than guessing.

Automatic Direct Debit is available through a variable payment plan

HMRC allows a one-off Direct Debit or an automatic variable payment plan for businesses registered online. The first automatic variable collection needs at least ten working days of lead time under current guidance.

Direct Debit cannot be used above £20 million. More importantly for most businesses, the bank account must remain funded when HMRC collects. A failed collection does not disappear because the return was filed correctly.

Reconcile machine takings, return and HMRC payment

Keep the quarterly return, net takings report, rate calculation, reference and bank payment together. GOV.UK says Machine Games Duty records must generally be kept for four years.

If machines are removed or the business stops being responsible, cancel the registration. Otherwise HMRC can continue issuing return requests and estimated assessments even though the machines no longer generate cash.

Worked example: if a pub's machines generate £6,000 of net takings in a quarter and all are charged at the 20 percent standard rate, the duty is £1,200 before considering any mixed-rate issues. Finance should be able to trace the £1,200 from machine records through the return to the bank payment.

Where a venue has several machine types, keep machine IDs and applicable rates in a permanent register. Moving or replacing a machine can change the duty category, and a cash-up report that only shows total machine takings will not explain the correct tax rate.

Review the payment method whenever the registration or bank account changes. An automatic Direct Debit tied to an old business account can fail long after staff assume the tax process is fully automated.

Where machines operate across several premises, reconcile the duty by site before producing the central return. That lets management detect one venue with unusual net takings or an incorrect machine classification before the figures are aggregated. Site-level analysis also helps explain why the quarterly HMRC payment changed even when total machine numbers remained stable.

Keep the registration status under review when premises open, close or change licence holder. Machine Games Duty responsibility can follow the person responsible for the premises rather than the machine supplier. Banking controls only work if the correct legal person remains registered and paying the duty.