UK Budget: Machine Games Duty Raised to 25% as Adult Gaming Centres Face Rates Carve-Out
Chancellor John Healey has increased Machine Games Duty on Category B machines to 25% while excluding adult gaming centres from business rates relief.
- Machine Games Duty on Category B gaming machines in betting shops and adult gaming centres increases from 20% to 25%.
- Adult gaming centres and vape shops have been specifically carved out from expanded UK small business rates reliefs.
- The National Living Wage for workers over 21 will rise by 3.9% to £13.20 per hour alongside the tax changes.
UK Chancellor of the Exchequer John Healey has announced that taxes levied on the most commonly used gaming machines will increase by five percentage points as part of the 2026 budget. Under the measures unveiled by the Treasury, Machine Games Duty (MGD) on Category B slot machines situated in betting shops and adult gaming centres will increase from 20% to 25%.
The tax rise affects gaming machines classified under categories B2, B3, B3A, and B4, all of which operate with stakes capped at £2. Under the updated budget rules, these machines are now subject to the standard MGD rate of 25%, raising the operational tax burden across licensed betting offices and adult gaming centre estates.
Machine Categories and Duty Breakdown
The budget retains distinct duty tiers across Britain's broader machine categorisation framework. Category B1 machines, which feature a maximum stake of £5 and remain capped at 150 machines in large casinos or subject to a five-to-one ratio against other machine categories in other venues, will continue to be taxed at the 25% MGD rate.
Lower-stake machines are not subject to the duty increase. Category C and Category D terminals, which both have a maximum stake limit of £1, will continue to be taxed at the lower MGD rate of 15%. Category A machines, which represent the highest tier under domestic gambling classifications, remain prohibited from operation in any venue across the UK.
Exclusions from Business Rates Relief
In addition to the rise in machine duties, adult gaming centres face property tax impacts following specific exclusions from commercial support packages. The Chancellor confirmed that the threshold for small business rate relief for retail, hospitality, and leisure businesses is increasing from £12,000 to £18,000. However, adult gaming centres and vape shops have been deliberately carved out from UK business rates reliefs.
The Treasury confirmed that the business rates transitional relief supplement will be extended for two years to assist eligible firms. However, because adult gaming centres have been carved out from the relief measures, operators in that sector will be unable to access the property support mechanisms available to other commercial high street premises.
Statutory Wage Adjustments
The duty and rates decisions coincide with higher statutory payroll requirements across retail operations. The UK National Living Wage for individuals aged over 21 will increase by 3.9%, rising from £12.71 to £13.20 per hour.
Together with the five percentage point rise in Machine Games Duty for Category B terminals and the exclusion from the raised £18,000 small business rates threshold, the changes introduced by Healey represent a notable adjustment in the fiscal conditions governing high street gambling venues.
