Burnham’s Pub Business Rate Cut Threatened by Proposed Machine Duty Hike

Prime Minister Andy Burnham’s plan to slash business rates on pubs by 20% risks backfiring if it is funded through higher taxes on gaming machines, particularly the B3 category found in many of the same venues. The tax relief, one of the government’s first major policies, is intended to support struggling pubs, but Burnham has signalled that adult gaming centres (AGCs) will bear the cost through increased levies.

The concern is that B3 machines, which are a staple in pubs across the UK, could be caught in the same tax net. Any significant rise in machine gaming duty (MGD) would eat into the very profits the business rate cut aims to protect, potentially offsetting the benefit for pub operators.

Data from Wetherspoons illustrates how crucial gaming machines are to pub finances. When the chain introduced them in 2018, investor presentations indicated they would generate roughly 25% of group profits. The Financial Times now projects that figure will reach 27% for the 2026 financial year, compared with 30% from food. While food contributed £807.9m in revenue in the 2025 financial year against £73m from slots, the much higher margin on machine income makes it a vital profit driver.

Wetherspoons paid £18.2m in gaming duty in the 2025 financial year out of a total tax bill of £837.6m. A proposed increase in MGD from 20% to 50%—previously mooted by former Chancellor Rachel Reeves and associated with Gordon Brown—would have slashed the chain’s post-tax profits by 48%, according to owner Sir Tim Martin.

The retail gambling sector was largely spared in last autumn’s budget, but Burnham and his Chancellor John Healey are now revisiting the issue as part of broader efforts to revive the economy. With two pubs closing per day in the first quarter of 2026, resulting in 2,400 job losses, the sector clearly needs support—but hitting B3 machines could undermine that goal.