John Healey Raises Bank and Gambling Taxes in First Budget
Chancellor John Healey increased the bank surcharge to 6% and the Machine Games Duty to 25% to fund energy support and business rate freezes.
Chancellor of the Exchequer John Healey announced a series of tax increases in his first Budget on Wednesday to fund energy bill support and regional investment. The primary measure is a temporary increase in the corporation tax surcharge for banks, which will double from 3% to 6% for 15 months starting January 1, 2027. The Office for Budget Responsibility expects the hike to raise £1.5 billion, which the government will use to provide £100 council tax cash refunds to 20 million households and scrap standing charges for gas and electricity.
Despite warnings from UK Finance that the levy would weaken competitiveness, shares for major lenders including Barclays, Lloyds Banking Group, and NatWest rallied. Investors reacted with relief as the 6% rate remained below the 8% ceiling some had feared. Other budget allocations include £1 billion for social housing, £432 million for rough sleeping programs, and a 3.9% increase in the minimum wage for workers aged 18 and over.
Healey also increased the Machine Games Duty on slot machines from 20% to 25%, effective April 1, 2027. While the government intends to use this revenue to freeze business rates for the retail and hospitality sectors, the Betting and Gaming Council warned the move could result in 9,000 job losses and the closure of nearly 1,000 betting shops and casinos. The British Horseracing Authority estimated a potential annual loss of £57 million due to the increase.
