UK committed to gaming tax increase but will monitor impact 

The UK Government will not change its decision to nearly double remote gaming duty but will closely monitor the impact on the sector “including in Gibraltar”, amid concerns it will hit the Rock’s economy hard. 

That was the message from Labour MP Dan Tomlinson, the Exchequer Secretary to the Treasury, in a letter to Nigel Feetham, the Minister for Justice, Trade and Industry in Gibraltar. 

Mr Feetham had continued engaging with the UK Government after Chancellor Rachel Reeves announced a steep increase in online gambling tax in November, targeting a sector she said was associated with the “highest levels of harm” to consumers.  

In a Budget statement that month, Ms Reeves said she was reforming gambling taxes in response to the rise in online gambling, announcing an increase in remote gaming duty from 21% to 40% and on online betting from 15% to 25%.  

The decision was met with grave concern in Gibraltar, amid fears the UK increase could impact the Rock’s UK-facing gaming sector disproportionately and have a devastating effect on the local economy.  

Mr Feetham had urged a transition period and an amendment to the UK Finance Bill on the gambling tax to mitigate the cost-cutting and redundancy programmes the industry is now expected to face, and to protect Gibraltar’s economy including the Gibraltar Government’s own tax revenues from this sector. 

But while Mr Tomlinson welcomed the engagement, he made clear the UK Government would budge from the decision. 

“I appreciate the concerns you set out about the potential impact of these measures on effective tax rates, business viability, and employment in Gibraltar and the UK, particularly for smaller and more highly leveraged firms,” Mr Tomlinson said in a letter to Mr Feetham, first reported by GBC. 

“I also acknowledge the representations that have been made on moving Remote Gaming Duty and General Bettering Duty to a different tax base, including through changes to the treatment of freeplays and free bets.” 

“The government believes it is appropriate to retain the existing basis for the calculation of Remote Gaming Duty and General Betting Duty, in line with the policy announced at the Budget.” 

And he added: “While the government does not intend to change the tax base for Remote Gaming Duty or General Betting Duty or to legislate for the alternative approach you propose from 1 April 2026, we value the evidence you and your officials are assembling on the impact of these reforms,” Mr Tomlinson said in the letter. 

“We will continue to monitor developments in the sector closely, including in Gibraltar, and to engage with you and industry stakeholders to ensure that the regime remains effective, proportionate, and aligned with our wider objectives on consumer protection, tackling illegal gambling, and maintaining the sustainability of the public finances.” 

Mr Feetham, in common with the gaming sector itself, had cautioned that the UK move would likely lead to players shifting to unregulated gambling markets, undermining one the aims of the increased duties. 

Mr Tomlinson acknowledged those concerns in his letter but said the UK Government would bolster ongoing efforts to protect consumers. 

“You also raise the important issue of the risk of activity shifting to the illicit market,” Mr Tomlinson said in the letter, dated December 23, 2025. 

“The government shares your view that protecting consumers and maintaining the integrity of the regulated market are critical objectives.” 

Mr Tomlinson said the UK Gambling Commission was already tackling illegal operators and would receive an additional £26m in funding over three years to “strengthen enforcement and to tackle illegal gambling”. 

“This investment is intended to reinforce the legitimate, regulated market and help mitigate the risks you describe,” Mr Tomlinson said in the letter to Mr Feetham. 

The Gibraltar Government will continue to gather data and share it with the Treasury, including on the significant adverse impact these measures are expected to have on Gibraltar’s tax revenues in the new financial year commencing April 1, 2026. 

The UK gambling tax increases will come into effect on that date. 

With Gibraltar-based gaming companies paying UK tax on a quarterly basis, the impact to the Gibraltar Government’s tax revenues will be felt as from April.