UK licence fees for B2B game suppliers fell significantly on 1 October, with some studios now paying less than a third of what they would have paid under the previous fee structure. A supplier selling £700,000 worth of games annually now faces first-year licence fees of £12,758, down from £39,442 under the old regime.
The fee reduction comes as B2B suppliers have increasingly raised questions about the cost and complexity of entering the UK market, particularly following widespread confusion over the 40% Remote Gaming Duty and new licensing requirements.
Clearing Up the Tax Confusion
Much of the hesitation around UK market entry has stemmed from misunderstanding about the 40% gaming tax. The Remote Gaming Duty is paid exclusively by operators whose customers are UK players. HMRC has confirmed that software licence holders are never liable for this tax, removing a significant perceived barrier for B2B suppliers considering the market.
The confusion appears to have been widespread enough to deter potential applicants at recent industry expos, where B2B suppliers repeatedly raised concerns about the tax burden alongside the licence fees themselves.
How the New Fee Structure Works
The revised fee structure, which took effect at the start of October, appears designed to reduce the barrier to entry for smaller suppliers while maintaining regulatory oversight. The example cited shows a dramatic reduction in year-one costs for a studio generating £700,000 in annual UK game sales, though the full fee schedule and how it scales across different revenue bands has not been detailed in the announcement.
The lower fees apply to software studios supplying games into the UK market, representing a significant shift in the cost structure for companies evaluating whether to pursue UK licensing.
Who Needs a Licence
Both game studios and resellers require UK licensing under the current framework. The determining factor is who signs the supply contract with a UK-licensed operator. This means that business model and contractual structure play a direct role in determining licensing obligations, not just the development of gaming content.
The clarification on licensing requirements and the reduced fee burden may prompt a fresh wave of applications from B2B suppliers who had previously shelved UK market entry plans due to cost concerns. With the dual barriers of tax confusion and high fees now addressed, the UK market may become more accessible to mid-sized studios that had found the previous cost structure prohibitive.
