Healey raises Machine Games Duty to 25% in UK budget
Chancellor John Healey confirmed a five-point rise in Machine Games Duty on standard slot machines, using the revenue to help fund high street business rate relief.
UK Chancellor of the Exchequer John Healey has confirmed that Machine Games Duty on the most widely used gaming machines will rise from 20% to 25%, as part of his 2026 budget.
Addressing the Commons, Healey tied the move to a package of business rate changes designed to support high street firms, describing it as a "budget of stability and economic sense" in line with Prime Minister Andy Burnham's long-standing push to revive town centres.
Small business rate relief for retail, hospitality and leisure firms will be widened, with eligibility lifted so that businesses with a rateable value of up to £18,000 qualify, up from £12,000 previously. SBC News reports that around 70,000 businesses will be taken out of the rates system entirely as a result. The move builds on a 20% cut to business rates introduced earlier under Burnham's government.
Healey said the gambling sector would help fund that relief: "To pay for this support for our high streets, I'm raising taxes on gambling by increasing Machine Games Duty from 20% to 25% for higher stakes machines, whilst protecting pubs and seaside arcades."
He also framed the wider budget as proof of his commitment to "a chancellor who champions small British firms that give character to our communities".
Notably, Healey's speech named adult gaming centres and vape shops specifically when discussing business rates, but did not mention betting shops directly. It remains unclear whether retail betting premises will be included in the relief changes, though they will still be affected by the MGD rise regardless.
Healey confirmed that AGCs and vape shops would be excluded from the business rates relief altogether: "I will carve out adult gaming centers and vape shops from business rates reliefs, and extend the business rates transitional relief supplement for another two years, and I will strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online."
The duty increase had been anticipated across the industry, though it falls well short of the doubling of gambling tax rates demanded by the Social Market Foundation think tank and former Prime Minister Gordon Brown. It adds to pressure already facing omnichannel operators including Paddy Power, Betfred and William Hill, which are managing earlier increases to Remote Gaming Duty and General Betting Duty.
The standard MGD rate applies to Category B4, B3A, B3 and B2 machines, which carry stake limits of £2 and are the most common machines found in betting shops, arcades and AGCs. These will now be taxed at 25%, up from 20%.
Category B1 machines, which allow stakes up to £5 and are capped at 150 per large casino or a 5:1 ratio against other machine types elsewhere, were already taxed at the higher 25% rate alongside Category A machines, which remain unpermitted in any UK venue. That top rate is unchanged.
Lower-stake Category C and D machines, the penny slots and pub fruit machines capped at a £1 stake, continue to be taxed at the lower 15% MGD rate. Healey indicated the government has no intention of targeting these machines, citing concern for pubs, which SBC News notes have been closing at an average rate of one per day.
Healey's budget also allocates roughly £1.42 trillion to day-to-day government spending and infrastructure, including defence, while keeping fiscal headroom in reserve to absorb what he described as the impact of the Iran war and to protect household finances.
Alongside the gambling and business rates measures, Healey confirmed the National Living Wage for workers over 21 will rise by 3.9%, from £12.71 to £13.20 an hour, with the National Minimum Wage for 18 to 20-year-olds, currently £10.72, rising by the same percentage.