High street support pledged but gambling firms set to pay the price
Gambling firms will see duty on machine games with stakes over £1 lifted from 20% to 25% from April next year.
Chancellor John Healey has unveiled further support for Britain’s embattled high streets, with plans to pay for it by hitting gambling firms with more tax hikes and launching an online sales tax crackdown.
Gambling firms will see duty on machine games with stakes over £1 rise from 20% to 25% from April next year to help pay for an extension of business rates support for a raft of high street businesses.
But the duty hike is far less than first feared, sparking investor relief across the sector after initial expectations the tax would be doubled.
Shares in listed gambling firms jumped in response, with Mecca Bingo and Grosvenor Casinos owner Rank up 11% and Ladbrokes group Entain 5% higher in the FTSE 250 Index.
The Chancellor said he would increase the threshold for 100% small business rates relief for hard-hit retail and hospitality firms from £12,000 to £18,000, with tapered relief from £21,000, up from £15,000.
This will mean an extra 70,000 firms taken out of paying business rates altogether, he added.
A further 3,500 pubs, 3,900 restaurants, 2,200 cafes and 1,700 hairdressers and beauty salons will be exempted from paying business rates, according to the Treasury.
Elsewhere across the retail and hospitality sector, the Government will also freeze real-terms business rates bills for qualifying properties in England in 2027‑28 and 2028‑29.
The total package of measures will mean that half of all retail and leisure firms in England will not pay business rates and around 110,000 will see property tax bills fall next year.
Mr Healy also turned to online marketplaces to help pay for the high street support, with plans to make them responsible for collecting VAT owed by all retailers selling on their platforms.
Online marketplaces are required to collect VAT on sales made by overseas businesses to UK customers, but some foreign firms have been said to use shell companies registered in Britain to bypass the rule.
The Government will now close the loophole by making marketplaces such as Amazon, eBay, Temu and Shein also responsible for collecting VAT on sales by UK businesses, where those businesses are making more than £90,000 of sales through their platforms, taking effect from October next year.
The Government warned it would also “continue to explore how the business rates system could better target online retailers in ways that minimise any indirect impacts for wider retail businesses, to fund support for the high street”.
While investors in gambling firms were relieved the tax hikes did not go further, Entain criticised the machine games hit as “another disappointing decision” and cautioned it would see it fork out an extra £25 million a year.
It comes on top of increases to gambling taxes at last November’s budget.
But Entain said betting shop closures, cost cutting and other plans would help “fully mitigate” the machine games duty hit by the end of 2028.
Stella David, chief executive of Entain, said: “The previous gambling tax increases announced in November last year have already had detrimental consequences across the industry, with the effects being felt by employees, communities as well as customers.
“These additional tax changes will further compound that damage and push more people into the growing illegal market.”
Treasury calculations show the machine games duty will boost tax coffers by £135 million in 2027-28, peaking at £150 million in 2028-29.
The online marketplace sales tax crackdown will bring in an extra £165 million in 2027-28, rising to £320 million in 2028-29 before easing back to a £265 million gain in 2031-32.