William Hill says it will close 109 betting shops in the UK this year as a result of the government's recent hike in Machine Games Duty, with over 400 employees facing possible redundancy.

The company said Friday that the unexpected duty increase from 20 to 25 per cent on fixed-odds betting terminals (FOBTs), announced by the government in late March, had caused it to initiate a review of shop profitability resulting in the decision to close 109 underperforming outlets.

"This is particularly disappointing as, through the economic downturn, we have worked hard to grow our retail base but this further planned increase in indirect taxation makes this action necessary," the company added.

William Hill estimates that it will incur around £24m in exceptional costs as a result of the closures, £6m of which is expected to be non-cash asset write-offs, with a further £17-18m in future cash expenses including rent, rates and redundancies.

The shop closures are expected to impact around 420 employees, although the company said it would seek to redeploy people where possible.

In the first quarter of 2014 William Hill's gross win per machine amounted to £926 per week, up from £904 in Q1 2013. However, a 13 per cent fall in over the counter revenue meant that the company's retail operating profit in the first quarter was 25 per cent down on the same period last year.

The company also announced Friday that it has almost completed the  roll out of new Eclipse gaming machines to half its retail estate, which include new time and spend limits established under the new voluntary Code for Responsible Gambling adopted by the UK's leading bookmakers earlier this year.

Shares in William Hill plc (Co. Data) (LSE:WMH) were trading up 1.3 per cent in London early Friday morning at 337.70 pence per share.