UK Government to Raise Machine Games Duty to 25% From April 2027
United Kingdom.- 29 October 2026 | www.zonadeazar.com The UK Government has confirmed an increase in Machine Games Duty (MGD) from 20% to 25% for higher-stakes gaming machines as part of the 2026 Budget presented on 28 October.
The measure was announced by Chancellor of the Exchequer John Healey during his address to the House of Commons and will take effect on 1 April 2027.
The tax increase will primarily affect gaming machines in adult gaming centres, betting shops and certain bingo venues, while the Government intends to protect pubs and traditional amusement arcades.
Machine Games Duty Increases by Five Percentage Points
The reform will raise the applicable Machine Games Duty rate from 20% to 25% for qualifying gaming machines.
The change represents an increase of five percentage points, equivalent to a 25% rise relative to the previous rate.
The higher rate will apply to machines meeting at least one of the following conditions:
- A maximum stake exceeding £1 per game.
- A maximum prize exceeding £100.
The duty is calculated on taxable net takings from gaming machines rather than the total amount wagered by customers.
New Rate Takes Effect in April 2027
The Government has set 1 April 2027 as the implementation date.
The reform will be introduced through the Finance Bill 2026-27.
Until then, affected businesses will have time to assess the financial consequences and adjust their forecasts.
The Budget documentation confirms that the revised rate will be determined by the maximum stake and prize thresholds applicable to each machine.
Pubs and Seaside Arcades to Be Protected
One of the Government’s objectives is to concentrate the tax increase on machines considered to present greater gambling-related risks.
Consequently, lower-stakes gaming categories will retain their existing applicable rates.
The framework will include:
- Low-stakes and low-prize machines: 5%, where the relevant thresholds are met.
- Intermediate gaming machines: 20%.
- Higher-stakes or higher-prize machines: 25% from April 2027.
This differentiated structure is intended to avoid a blanket tax increase affecting pubs and seaside amusement arcades, which traditionally operate lower-stakes machines.
Statements From Chancellor John Healey
Presenting the Budget, Healey explained that the increase forms part of a wider strategy to support high-street businesses.
The Chancellor confirmed that Machine Games Duty would rise from 20% to 25% for higher-stakes machines while protecting pubs and seaside arcades.
He also announced that adult gaming centres and vape shops would be excluded from certain business rates relief measures.
These decisions form part of the Government’s wider package aimed at supporting traditional retail, hospitality and leisure businesses.
Adult Gaming Centres Face Additional Costs
Adult Gaming Centres (AGCs) are among the businesses most directly exposed to the tax change.
These venues operate electronic gaming machines that may fall within the new 25% rate depending on their characteristics.
The Government has also confirmed that AGCs will be excluded from certain business rates reliefs available to qualifying retail, hospitality and leisure properties.
The combination of the two measures could increase operating costs for these establishments.
The financial impact will depend on the machines operated, individual business revenues and property-related expenses.
Betting Shops Also Face Higher Taxation
The Machine Games Duty increase will also affect betting shops operating machines subject to the higher rate.
Companies with exposure to the UK retail betting market include Entain, the owner of Ladbrokes, and Evoke, which operates William Hill UK and 888.
The new duty rate could place additional pressure on operating margins, particularly across land-based estates.
However, the overall impact will depend on the number of affected machines and the profitability of individual locations.
Industry Previously Warned About Employment Risks
Ahead of the Budget, industry representatives expressed concerns about the potential consequences of higher gambling taxation.
The Betting and Gaming Council (BGC) commissioned research examining possible scenarios involving increases in Machine Games Duty.
The analysis suggested that doubling the duty could result in the closure of up to 1,470 betting shops and the loss of 15,900 jobs.
These figures relate to a scenario in which the duty was doubled and should not be interpreted as an estimate of the impact of the Government’s confirmed increase to 25%.
The final increase announced by the Chancellor was smaller than the change assessed in that scenario.
Additional Revenue to Support High-Street Businesses
The tax increase forms part of a broader package designed to finance business rates measures benefiting qualifying commercial properties.
Government forecasts suggest the Machine Games Duty reform will raise approximately:
- £135 million in 2027-28.
- £150 million in 2028-29.
- £145 million in 2029-30.
The additional revenue will contribute to the funding of measures supporting retail, hospitality and leisure businesses.
The Government has also announced a two-year real-terms freeze in certain business rates.
Responsibility for Paying Duty to Change in 2028
The Budget introduces a second reform concerning Machine Games Duty.
From 1 April 2028, the Government intends to make machine suppliers liable for the duty on supplier-owned machines operated under profit-sharing arrangements.
Under existing commercial structures, financial responsibilities may be divided between machine suppliers and venue operators.
The proposed reform changes which party will be directly responsible for paying the tax.
A twelve-week public consultation has been launched on its implementation, closing on 20 January 2027.
Further Tax Pressure on the UK Gambling Sector
The increase follows other significant changes to the UK’s gambling tax framework.
These include:
- Remote Gaming Duty: increased from 21% to 40% in April 2026.
- General Betting Duty: a new 25% rate for certain remote bets from April 2027.
- Machine Games Duty: increased from 20% to 25% for higher-stakes machines from April 2027.
Together, these reforms create higher tax obligations across several parts of the gambling industry.
Operators will need to evaluate their costs, investment plans and commercial strategies in response to the revised fiscal framework.
Industry Impact and Next Steps
The confirmation of the Machine Games Duty increase establishes new tax conditions for UK gaming machine operators.
The measure concentrates the increase on higher-stakes machines while maintaining differentiated rates for lower-risk products.
Over the coming months, affected companies will need to prepare for implementation and monitor the relevant legislative process.
The increase from 20% to 25%, scheduled for 1 April 2027, is expected to generate additional government revenue while raising the tax costs of certain land-based gambling businesses.
Edited by: @fonta
