UK Budget Raises Machine Games Duty to 25% for Higher-Stake Machines

Chancellor John Healey’s Budget 2026, delivered on October 28, 2026, raises Machine Games Duty on higher-stake gaming machines from 20% to 25% from April 1, 2027, and opens a consultation on moving liability for the duty from premises operators to machine suppliers from April 1, 2028.

The rate increase is set out in HM Revenue & Customs’ Budget 2026 overview of tax legislation and rates, published on October 28, 2026. Legislation in Finance Bill 2026-27 will amend the stake and prize thresholds used to determine the rate chargeable on gaming machines, so that machines with a maximum charge to play of more than £1, or a maximum prize of more than £100, become subject to the 25% higher rate instead of the 20% standard rate.

The same legislation will put beyond doubt the Remote Gaming Duty treatment of freeplays, which will be renamed restricted plays, alongside prizes and tournaments, also from April 1, 2027. The measure sets out how restricted plays won from another restricted play are excluded from duty calculations, determines when tournament participation is treated as playing a game of chance, and revises the definition of a prize.

The increase in gambling tax on higher-risk machine games helps pay for the Budget’s business rates package for retail, hospitality and leisure properties in England, under which those properties will see their bills frozen in real terms, reduced or cut to zero, according to HM Treasury’s Budget 2026 statement. The Budget’s policy costings document also confirms that vape shops and adult gaming centres will no longer benefit from certain business rates reliefs from April 1, 2027.

Supplier Liability Consultation

HMRC’s consultation on changing Machine Games Duty liability, also published on October 28, 2026, covers the move of liability to the supplier for supplier-owned machines operated under profit-share arrangements. Premises licence holders, permit holders and pub tenants will remain liable where they own a machine outright or use it under a fixed rental or lease arrangement and control the takings. Legislation for the change will be introduced in a future Finance Bill.

As of September 2026, there were approximately 14,900 Machine Games Duty registrations, of which around 13,500, or 89%, were pubs and clubs, many with only one or two gaming machines, the consultation states. HMRC said the reform will remove duty obligations from many businesses for whom machine gaming is a minor activity and concentrate liability on those more closely involved in gaming machine operations.

Exchequer impact figures certified by the Office for Budget Responsibility show the liability reform raising £20 million in 2028-29, £15 million in each of the following two years and £10 million in 2031-32. The consultation runs for 12 weeks and closes on January 20, 2027.

Earlier Duty Rises

The measure follows the gambling duty package set out in HMRC’s gambling duty changes paper, published on November 26, 2025. That package raised Remote Gaming Duty from 21% to 40% from April 1, 2026, introduced a new 25% remote rate of General Betting Duty from April 1, 2027, and abolished Bingo Duty from April 1, 2026. Remote bets on UK horseracing and bets placed through self-service betting terminals on licensed premises are excluded from the new remote betting rate and remain at 15%. HMRC said the changes would raise over £1 billion per year.

Industry Response

The Betting and Gaming Council expressed deep disappointment at the decision. The trade body cited EY projections that, at a 25% rate, almost 9,000 people could lose their jobs and almost 1,000 betting shops and casinos could close or be at serious risk of closure. It said more than 600 betting shops have closed or announced closure since Budget 2025, with over 11,000 jobs across the online and retail sectors lost or put at risk.

Grainne Hurst, the council’s chief executive, said: “This is a deeply damaging decision and a blow to the thousands of workers, businesses and communities who depend on Britain’s regulated betting and gaming industry.” Hurst said higher taxes on the regulated industry would make the illegal gambling market more attractive to customers, where operators pay no UK tax and offer none of the safeguards required of licensed businesses.

The BGC states the regulated industry contributes £6.8 billion to the UK economy, generates more than £4 billion in tax and supports 109,000 jobs, alongside around £350 million a year to horseracing and more than £40 million to the English Football League and Scottish football.

Operators had set out their exposure before the Budget. In an open letter to the Prime Minister dated September 11, 2026, Entain chief executive Stella David said doubling the standard rate of Machine Games Duty to 40% would add around £100 million to the annual cost of running the company’s UK retail business, citing EY modelling commissioned by the BGC that indicated up to 1,470 betting shop closures and 15,900 job losses at that rate. Entain employs more than 13,000 people in the UK, more than 12,000 of them across around 2,300 Ladbrokes and Coral betting shops, according to the letter.

HMRC said it will publish a formal response after the liability consultation closes, with responses informing the detailed rules and implementation of the reform from April 1, 2028.