UK Tax Increases Force Gibraltar to Rethink Its Economic Strategy
Gibraltar is urgently planning alternatives after the UK confirmed steep increases to gambling taxes in its Autumn Budget.
LISTEN TO THIS ARTICLE:The territory’s minister for justice, trade and industry, Nigel Feetham KC, told Gibraltar’s parliament that the UK measures – which raise Remote Gaming Duty for online casino games from 21% to 40% from April 2026 and lift general betting duty from 15% to 25% from April 2027 – present an acute fiscal challenge for the self-governing jurisdiction.
Feetham warned that the tax hikes will have both direct and knock-on effects on Gibraltar’s public finances. He noted that Gibraltar-based operators already remit about £750 million a year in UK gambling taxes because levy rules are charged on a point-of-consumption basis. "Gambling taxes are a top-line tax charged on revenue and should not be confused with bottom-line profit," Feetham said. "Even before these changes, effective tax rates for some operators were estimated at 60–65%. Recent modelling suggests effective rates could rise to between 80% and 100%. That is simply unsustainable for many businesses in our sector."
The minister said the changes threaten to undermine work the government has pursued on corporate tax reform over the past two years and could reduce PAYE receipts if operators seek to offset higher UK tax bills through job cuts. "Revenue from the gaming industry supports essential services such as healthcare and education", he said. "If mitigation strategies include staff reductions, the consequence will be immediate and measurable pressure on our public finances."
Related: UK Gambling Tax Hikes Stir Merger Talk as Operators Brace for Impact
Gibraltar Seeks Alternatives
Feetham said Gibraltar had spent months lobbying British officials to highlight the potential consequences of the tax rise, but that those efforts did not prevent the measures from being enacted. "We did not ask for these measures. We lobbied strongly against them. Frankly, there was very little more we could have done", he told MPs. He stressed that replacing an industry that has been central to Gibraltar’s economy for decades cannot happen overnight.
As a result, the government is exploring a ‘Plan B’ that seeks to broaden the territory’s economic base rather than attempting an immediate substitution of gaming. Officials are prioritising technology-friendly regulatory frameworks and measures to attract high-value firms in AI, blockchain and digital services. "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", Feetham said.
Feetham also emphasised practical steps the government is considering: regulatory sandboxes for fintech and blockchain projects, incentives for research and development, and enhanced training programmes to create a pipeline of local talent capable of supporting emerging sectors.
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Industry Reaction and Next Steps
Industry groups and advisers say the timeline leaves little room for gradual adjustment. "The phased increases to Remote Gaming Duty and general betting duty will force operating models to be reassessed within months, not years", said Mark Ellison, a regulatory consultant with two decades’ experience advising gambling firms. "Some operators will be able to absorb the cost in the short term, but many will restructure, consolidate or consider moving activities out of point-of-consumption markets."
Analysts warn that policy levers available to Gibraltar are limited by the scale of the market and by international tax rules. Possible short-term interventions include targeted tax credits, relocation support for retained jobs, and accelerated diversification funding for SMEs in tech. Longer-term options involve deepening ties with fintech investors in London and continental Europe, and using competitive but sustainable regulatory offers to attract firms generating intellectual property and high-skilled employment.
For now, the government’s priority appears to be managing an orderly transition while defending the firms that remain in the sector. "We must start doing things differently and seize new opportunities as they arise", Feetham said. "There is no easy fix, but with the right policy choices, we can protect essential revenue streams and build a more resilient economy."
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