Labour Weighs Bank, Gambling and Online Marketplace Tax Changes

What changed

Chancellor John Healey is weighing ways to raise money in this week’s Budget without increasing the rates of income tax, VAT or National Insurance, as Labour promised in its 2024 manifesto.

The options described include:

• Raising the bank corporation-tax surcharge from 3% to 5.5%, potentially raising £1bn to £2bn a year.
• Doubling tax on electronic gaming machines from 20% to 40%, potentially raising £275m to £460m.
• Making large online marketplaces such as Amazon, Ebay and Temu collect VAT owed by retailers selling through their platforms.

Why it matters

The pressure is coming from the government’s shrinking fiscal headroom. Economists estimate that its buffer may have fallen from roughly £24bn six months ago to as little as £11bn, partly because borrowing costs have risen. Healey also needs room for measures aimed at the cost of living and higher defence spending.

That makes the choice less about finding one magic tax and more about deciding who absorbs the cost.

Banks could initially pay through lower profits and shareholder distributions. They may then respond with lower savings rates or higher borrowing costs. The banking industry says heavier taxation could make the UK less attractive for investment and put jobs at risk.

Gaming-machine tax would target an industry linked to harmful gambling, particularly on deprived high streets. But betting shops could face tighter margins, and closures could reduce bookmakers’ contributions to horse racing. Players might also face worse odds if operators pass the tax on.

The online-marketplace proposal is aimed at enforcement rather than a new headline tax rate. The Treasury estimates that about £12bn a year is lost through VAT that companies should pay. Making platforms responsible for collecting it would shift more of the burden onto the businesses selling through them.

The important caveat is that these are possible measures, not confirmed Budget decisions. The final package will show whether the government prioritises the most immediate revenue, the strongest social argument, or a broader attempt to close a large compliance gap.