The UK government plans to increase Machine Games Duty from 20% to 25% for more gambling machines from April 1, 2027. Chancellor John Healey announced the measure in his October 28 Budget, adding to the costs facing betting shops and adult gaming centers.
The change is scheduled for legislation through the Finance Bill 2026–27. It has been announced as government policy, with the higher charge due to begin next April rather than immediately.
The New Thresholds Bring More Machines Into the 25% Band
Under the revised rules, machines with a maximum charge above £1 per play or a maximum prize above £100 will fall within the 25% duty band. Machines meeting those thresholds that currently attract the standard 20% rate will therefore face a higher bill.
Machine Games Duty is calculated on net takings, broadly the money received from players after winnings have been paid. That distinction matters because the tax is based on what the machine retains, rather than the total value of every spin.
For an illustrative £100,000 in taxable net takings, moving from 20% to 25% would increase duty from £20,000 to £25,000. The five percentage point rise therefore represents a 25% increase in the tax bill when takings remain unchanged.
Lower-stakes machines that remain within the standard band will continue to attract 20% duty. The separate 5% rate for the smallest-stakes machines also remains unchanged in the government’s published rates.
Horse Racing Warns About the Effect on Betting Shops
The British Horseracing Authority warned that higher machine taxes could weaken betting shop finances and reduce the income those shops generate for racing.
Chief executive Brant Dunshea said modeling shared with the Treasury pointed to a potential £57 million annual loss for the sport. He warned of consequences for prize money, racecourse finances and employment if shops close.
Those figures are forecasts cited by the racing authority. The number of closures and the eventual financial impact will depend on businesses’ responses after the tax change takes effect.
A Separate Reform Would Move Some Tax Duties to Suppliers
From April 1, 2028, the government also intends to make machine suppliers responsible for paying the duty where they own machines and share the takings with venues. Currently, responsibility generally rests with the premises business.
A consultation on implementing that transfer runs until January 20, 2027. Venues that own their machines, or use fixed rental arrangements while controlling the takings, would retain responsibility. The consultation concerns who accounts for the tax, with the rate increase proceeding separately.
