UK Chancellor raises Machine Games Duty from 20% to 25% in 2026 budget to fund high street relief

UK Chancellor John Healey has confirmed that Machine Games Duty will rise from 20% to 25% for higher-stakes gaming machines under the 2026 budget. He told the Commons that the increase is intended to pay for support for high streets, while pubs and seaside arcades are protected.

The duty is levied on revenue from Category B machines, which are found in betting shops, adult gaming centres and amusement arcades. The tax change forms part of a wider package of business rates measures consistent with Prime Minister Andy Burnham's high street agenda. The threshold for small business rate relief for retail, hospitality and leisure businesses will rise from £12,000 to £18,000, extending the 20% cut in business rates announced when Burnham took office.

Healey said he would exclude adult gaming centres and vape shops from business rates reliefs and extend the transitional relief supplement for two more years. His speech did not mention betting shops, and it has not been made clear whether they will benefit from the relief. The omission may offer the retail betting sector some comfort, although the higher duty will still affect its finances.

The increase had been widely expected by the British gambling industry. It falls well short of the doubling of rates urged by the Social Market Foundation think tank and former Prime Minister Gordon Brown. Even so, it adds pressure on omnichannel operators such as Paddy Power, Betfred and William Hill, which are already absorbing earlier increases in Remote Gaming Duty and General Betting Duty.

The source describes the Category B family as five machine types. B4, B3A, B3 and B2 machines have stakes capped at £2, and the B1 has a maximum stake of £5. Category C and D machines, such as the low-stakes machines found in pubs and seaside towns, with a maximum stake of £1, remain subject to a lower 15% rate.

The budget also raises the National Living Wage by 3.9%, from £12.71 to £13.20 an hour. This is a further cost consideration for betting companies, which employ many minimum wage staff across shops and support centres. Healey said headroom in the budget would be reserved to absorb the impact of the Iran war.