Financial Secretary Stephen Timms said businesses offering financial spread-betting services would be able to apply to Customs & Excise to stretch the tax over longer periods rather than the one month normally allowed to sporting bookmakers.
The new tax replaces betting duty deducted from punters’ bets, which is being scrapped as business has moved offshore in an avoidance move. Under the new rules, sporting bookmakers will be taxed at 15% on profits on fixed odds and 10% on spread betting. But City spread betting companies will be taxed at 3% on financial spread betting in recognition of substantial extra costs.
Timms said the rates of tax had been calculated overall to result in a £25m loss to the Treasury in the short term, which would be recouped later if international business grew.
Individual bookmakers or classes of bookmakers could apply to Customs for longer accounting periods and promised it ‘will work with the trade’ to ensure they are not used as a means of duty avoidance.
It was Conservative spokesman Richard Ottaway who said that financial spread betting was more volatile, resulting in companies spending months in the red.
Ottaway claimed a financial spread betting company could lose one month and make a profit the next, ending up evens, but having to pay 2% tax on a month’s profits through lack of a right to carry over losses.
But his comments began a row over political donations. Stuart Wheeler, chairman of IG Index, was reported to have donated Pounds 5m to the Conservatives in January.
Ottaway made a declaration at the start of the debate that he had received from the Sports Spread Betting Association and that one of its members was a company that had made a donation to his party.
Ottaway went on to warn: ‘Spread betting is an infant industry. It is a success story and brings in earnings from overseas.
‘The industry is growing but the legislation threatens its livelihood to quite a serious extent.’
Despite the Timms’ announcement that the legislation rules would be relaxed and the withdrawal of the amendments as a result, Labour has continued to push the point.
Cabinet Office Minister Ian McCartney wrote to shadow chancellor Michael Portillo demanding details of contacts between the Conservatives, the Spread Betting Association, and Wheeler.
He said nobody would believe it was coincidence the Tories had tabled amendments which would have saved IG Index Pounds 400,000 a year.
‘It’s astonishing that after the sleaze of the last Tory Government, they appear willing to gamble with their integrity,’ said McCartney.
The IG Index spokesman said: ‘There is no connection between the two issues. The donation was a personal one, not a company one.’
- MPs on the Finance Bill Committee have been ordered to ignore the latest electronic aids in unscrambling this year’s Finance Bill.
Chairman Michael Clarke gave an unequivocal no laptops ruling at the start of detailed debates on the Bill.
He insisted: ‘Any electronic device on which one can see the clauses and schedules to the Bill is not allowed in the committee room.’
The decision followed the battle, launched by former Speaker Betty (now Lady) Boothroyd, against the pagers which Labour whips used to control backbenchers.