UK Gaming Machine Tax Rise: 655 Million Pound Target

HM Treasury has announced plans to raise the Machine Games Duty (MGD) rate by 5 percentage points to 25%. The Treasury expects to collect a total of 655 million pounds over a five-year period. Chancellor John Healey announced the decision in the autumn budget on Wednesday, 28 October.

Healey said the tax increase is needed to fund a support package for high street traders. Under the package, the business rates threshold for retail, hospitality and leisure businesses will rise from 12,000 pounds to 18,000 pounds. The measure, which is part of Prime Minister Andy Burnham's high street plan, aims to reduce costs for 70,000 small businesses. Arcades, betting shops and vape shops are excluded from these reliefs.

From 1 April 2027, machines with a stake above 1 pound or a prize above 100 pounds will be subject to a 25% tax. The change will mainly affect B category machines. C and D category machines, which have a stake of 1 pound or less and a prize below 100 pounds, will continue to be taxed at 20%. The Treasury expects an additional 135 million pounds in revenue in the 2027/28 financial year, followed by 130 million pounds in each of the next four financial years. The Office for Budget Responsibility (OBR) has endorsed these figures.

Policy analysis links high-stake, high-prize machines more strongly with gambling harm. However, the document does not state that the tax increase will lead to a measurable reduction in harm. The consultation document acknowledges that operators may change the return to player rates, that some customers may play less, or that they may switch to other gambling products.