Gibraltar seeks ‘Plan B’ amid UK gambling tax hike
A senior minister has cautioned that the tax rise could have both direct and indirect consequences for Gibraltar ‘s public finances.
UK.- Gibraltar’s minister for justice, trade and industry has warned the self-governing territory’s parliament that it needs to start “doing things differently” following confirmation of a rise in UK gambling tax in the Autumn Budget last week. Nigel Feetham KC said the tax hike was an issue “of vital importance to Gibraltar” and could have both direct and indirect consequences for public finances.
Feetham said Gibraltar had been an “international centre of excellence for online betting and gaming for decades, ever since the development of our gold standard regulatory framework for the sector in the 1990s”. But he said the UK tax changes would impact on the “vital work” the Gibraltar government has undertaken over the past two years on corporate tax reform.
See also: How will the UK gambling tax rises affect operators?
Rachel Reeves’ Autumn Budget includes a rise in Remote Gaming Duty for online casino gaming from 21 to 40 per cent from April 2026 and a rise in general betting duty from 15 to 25 per cent from April 2027.
Some gambling businesses have chosen to locate in Gibraltar for corporate tax purposes, but they also pay UK taxes on gambling revenues as the tax is charged on a point of consumption basis. Feetham said Gibraltar-based firms already pay £750m a year in gambling taxes to the UK Exchequer.
“Gambling taxes are a top line tax charged on revenue and should not be confused with bottom line profit,” Feetham said. “So effective tax rates (all taxes as a proportion of profit) are much higher. Even before these changes, it was estimated that this stood at 60-65 per cent. Modelling by some in the UK now suggests the effective tax rate on these businesses will increase to between 80-100 per cent.”
Feetham noted that revenue from the gambling industry in Gibraltar plays a crucial role in funding essential services such as healthcare, education, and broader public finances. The extent of the impact on Gibraltar’s corporate tax and PAYE receipts will depend on how effectively local operators can absorb or offset the higher UK tax costs. Feetham warned that if mitigation strategies include job reductions, this would directly affect PAYE contributions.
Plan B for Gibraltar?
The minister stressed that Gibraltar had spent months lobbying British officials, outlining the potential repercussions of the tax changes. Now the tax rise has been confirmed, he stressed the importance of the expanded licensing criteria proposed in the Gibraltar Gambling Bill to future-proof Gibraltar’s position, he also believes the territory must start to seek new avenues.
“Others locally have spoken about the need for a ‘Plan B’,” he said. “But let us be clear: replacing an industry as significant to our economy as gaming cannot happen overnight, particularly after we have already had to recalibrate our economic model following Brexit, endure the impacts of COVID, and navigate the subsequent cost-of-living crisis.
“Yet adjust we must, and that means doing things differently and seizing new opportunities for Gibraltar as they arise. But there is no way of sugar-coating this. It is bad news. We did not ask for these measures. We lobbied strongly against them. And, frankly, there was very little more that we could have done.”
As for the avenues that Gibraltar can explore, the minister highlighted work on technology-friendly regulatory frameworks, expanding support for AI, blockchain and digital services, and creating the conditions necessary to draw high-value businesses across emerging sectors.
”By focusing on innovation, skills and smart regulation, we can broaden our economic base, generate new revenue streams and secure long-term prosperity for Gibraltar at a time when other areas of our economy will be impacted by the recent UK Budget changes,” he says.
