Gambling winnings aren’t taxable in the UK. While other countries will tax anywhere between 1% and 25%, the UK won’t care if you’ve won £10 or £10.000.000. No matter what kind of gambling you’re doing from bingo to horse racing and everything in between, there will be no gambling winning tax in the UK.

1. Yes, you do get to deduct the losses so you don’t pay income taxes on the winnings, but that is only part of the story. The rest of the story has to do with how gambling winnings affect your Modified Adjusted Gross Income (MAGI).
2. Gambling winnings, tax or no tax Posted Mon, 16 Mar 2020 12:07:23 GMT by james frain I used to work as a software engineer, and watched some friends slip into gambling habits with little or no support from the government to address the ease with which people can get addicted.
3. Spread betting, index betting and binary options are not regulated by the UK Gambling Commission but instead fall under the umbrella of the Financial Conduct Authority (FCA). Despite this you do not need to pay the 18% UK Capital Gains Tax or stamp duty on winnings from Spread Betting.
4. Gambling winnings are not currently taxed in the United Kingdom. Instead, casinos and other betting sites pay taxes on their profits. Remote gaming operators currently pay a 15% duty. Unless you plan on operating a casino, this will be of little concern to you.

The online casino industry in the UK has an interesting tax history akin to a game of cat and mouse in many ways, with the government attempting to corner the industry and the gambling companies doing their best to wriggle out of a tight spot.

Most players would not pay this any mind, and rightly so, gambling is supposed to be fun and tax is anything but, however, when it has an impact on a gambler’s winnings, they are much more likely to prick up their ears.

Many people aren’t even aware of their tax situation if they win big on a jackpot or they have a big day on the live casino, so when it happens they are unsure of what to do.

Of course, they don’t really have to do anything, but knowing how the tax situation affects the games that you play is still a good idea.

Is Gambling Taxable in the UK?

First and foremost, gambling is classed as tax free in the UK for consumers (players and bettors), however, players in other countries such as France, the USA, and Macau may have to comply with taxes that are in the region of between 1% and 25%. In the UK though, players are able to keep all of their winnings for themselves and there is no legal obligation to declare them – but this wasn’t always the case.

From 1961 up until 2001, gambling was taxable in the UK in the form of a 6.75% ‘levy’ charged to operators, who then passed it on to bettors but upped it to 9%. Punters could choose to pay on either their stake or on their winnings, but obviously the tax on the stake was a lot less than it would be on any potential winnings, so most people chose this option.

Then, in 2001, the law changed to combat the increasing number of businesses relocating offshore to avoid UK tax, with a 15% tax on gross profits at the point of supply. Back in 2001 this made more sense than it may do now. Online gambling was in its infancy, so most bookmakers and casinos point of the supply was the UK high street. This also meant that punters could now gamble tax free for the first time since high street gambling was legalised in 1961.

However, as we know, online gambling took off in a big way and operators’ online income grew exponentially in comparison to their high street efforts. This actually led to even more businesses relocating offshore as well as many new online only businesses establishing themselves in these tax havens from the get go. Those with both online and high street retail outlets began to split their businesses in two, basing online revenue creating business offshore and leaving the high street part based in the UK.

This new problem resulted in an amendment to the 2005 Gambling Act, which came into force in 2014.

Point of Consumption Tax in the UK Gambling Industry

The inclusion of the Point Of Consumption Tax (POCT) in the 2005 Gambling Act made it very difficult for companies wanting to operate in the UK to avoid tax in the same way as they had done before.

The UK Government had noticed a significant decrease in tax paid from gambling companies despite to boom in the online gambling industry. All of these companies trading in the UK were based in tax havens where they paid a pittance in tax, none of which ended up in the UK Governments coffers.

The amendment meant that operators would pay the 15% tax at the point of consumption rather than the point of supply. Basically, this meant that if they had UK customers, they paid UK tax on income from those customers. The same rule applied to genuinely foreign companies wanting to trade here, as opposed to UK companies with an official offshore base.

Between 2017 and 2018, the UK government - HMRC made £2.9 billion from gambling businesses alone, so it was a huge win for them, and that was before the rate was bumped to 21% on games of chance. This new tax rate came in during 2019, making the UK a much more hostile environment for gambling companies.

Impact of the UK Point of Consumption Tax

There was not much of a noticeable impact on the gambling industry following the introduction of POCT. In fact, there is every chance that the shrewdest operators and executives would have been expecting this to happen at some point and had a strategy in place plus cash reserves to help them through any reactionary bear market.

In an attempt to offset some of the downside, online casinos started to provide more games with a lower RTP (Return To Player) rate, which means that theoretically, they do not pay out as often. Furthermore, there were fewer generous promotions all of a sudden, with ‘non-deposit bonuses’ virtually disappearing from the majority of online casinos. Apart from that though, it was business as usual.

Interestingly, this also came at a time when the ASA (Advertising Standards Authority) were really starting to clamp down on what gambling companies were allowed to do from a marketing perspective. This included not being able to advertise on television before a 21:00 BST/GMT watershed in order to combat underage gambling. They also had to be very careful with the wording of their adverts and terms/conditions to make sure that it wasn’t in any way misleading or even duplicitous.

The best online casinos and bookmakers responded to the changes by creating even more innovative markets and products that would attract the players they needed to increase revenues. These included initiatives like new betting markets, betting tools, and new game genres.

Do Professional Gamblers Pay Tax on Their Winnings?

Interestingly, the UK Government does not see a distinction between professional and non-professional gamblers, so the pros do not get taxed on their winnings.

Considering that they do this as their full time occupation this might seem unfair, however, with HMRC not currently recognising gambling as a trade (and it’s not really, is it?) this is unlikely to change.

That said, if you are of UK national but you gamble outside of the UK (if you were a professional poker player for instance), there is every chance that you could well be subject to local tax laws, so do your research if this sounds like you.

These players more than likely have an accountant who they employ to look into areas where they can save on paying tax, for example, any winnings in another country might not be taxable if the player was only there for a certain period of time, or if they were playing in a tax haven.

When to Declare Winnings from Gambling

As you now know, there is no obligation to let HMRC know if you have a windfall at your favourite casino or online casino.

There are, however, instances where it is advisable to think about declaring any winnings from your gambling activities anyway.

One of the biggest incidences is if you win a substantial amount of money because this will help to provide proof of your funds in case you are audited, investigated or you need to use it as collateral to get a loan to buy something, such as bricks and mortar real estate.

In addition to this, if you use your winnings as a gift to someone else, this may be subject to tax depending on the threshold percentage, and they may want to look into where it has come from.

None of this can get you in trouble, it’s just about acting early to save potential issues later on that could slow things down for you.

UK Gambling Tax Changes in the Future

In recent years, there has been a major campaign promoting Responsible due to increased media attention on players who suffer from gambling. This has put a lot of pressure on operators to do more and many of them are working hard to shrug off the slightly murky reputation gambling has with some people, and give the industry a new responsible and moral face.

A recent law that was passed banning UK casinos from accepting credit card deposits went hand in hand with this, as did the reduction of maximum stakes on FOBT’s in bookmakers shops.

This will ultimately cost the gambling operators money both in increased costs and lost revenue, and with the 21% POCT as well as heavy regulation that is already in place and the costs associated with that, it’s unlikely that more tax changes will occur in the imminent future.

The government need the tax income they get from the gambling industry, and will be wary of making the terrain so hostile that these companies simply stop trading here. This has already been happening, with several big betting companies, Betsson among the, all but abandoning the UK for greener pastures elsewhere.

It’s a balancing act; the companies need to be profitable and be given room to grow while at the same time operating fairly and contributing their fair share to the economy. The balance is pretty good at the moment so tax changes would be surprising, although further regulation would not.

One suggestion has been that professional gamblers earning over a certain amount per year might be taxed, but the amount of work it would take to get this up and running would likely not be worth the returns given the relatively low number of professional gamblers earning enough to be taxed on.

The high rollers among you will of course already be aware that your gambling winnings aren’t taxable in the UK. To be fair, even the smaller stakes players know this.

Here, we have a system in that we do not have to pay taxes on any of your winnings or stakes. And while this wasn’t always the case, today, this applies to all types of gambling, betting, poker, bingo slots and lotteries.

In many ways you are still paying tax on gambling it is just this is now put directly onto betting companies in the form of a point of cosumption tax. This 21% tax online and 15% in retail shops ultimately gets passed onto the customer through lower value odds and payouts. Once you do win money though it has effectively been pre-taxed and so you do not need to worry about paying any further tax at that stage.

If you do land that big one, or you simply make a lot of money through gambling in your life, you can rest assured knowing that HRMC are not entitled to a slice and can only watch on. That is until you want to give that money away or leave it to someone who will inherit it. Here we will look at that aspect of tax on gambling winnings.

History Of Gambling Tax In The UK

It wasn’t always so rosy for UK punters though. From 1960 through 2001, when Gordon Brown abolished gambling tax in that year’s budget, bettors could choose to pay 9% tax on either the stake (keeping it minimal) or their winnings (potentially all or nothing).

This changed just after the century however and a 15% tax on bookmakers and their gross profits was imposed on the point of supply instead. It was around this time that many UK bookmakers, led by BetVictor, moved their online operations offshore to Gibraltar where tax was capped at 1%.

In 2014, there was another alteration the 2005 Gambling Act when tax was changed to 15% on all gross profits at point of consumption including those firms holed up in Gibraltar and the Isle of Man. In 2019 the tax rate was increased to 21% for online betting.

Does this situation mean that people who use gambling as their main source of income earn a tax free living? Well, yes, even in the case of professional gamblers, winnings are not taxable.

Gambling winnings, therefore, remain tax-free, regardless of whether it’s your main source of income or just a bit of fun. The only counter to the rule being if a player is appearing somewhere for a fee, thus professionalising his or her appearance.

Spread betting also falls outside of these rules, it is actually classed as trading, meaning if you do it as your main source of income then you are liable to pay income tax on this for of gambling.

What About Inheriting Gambling Winnings?

While your winnings aren’t taxable by any gambling laws, other taxes may still apply, not least of all your winnings could be vulnerable to an inheritance tax when you die.

Inheritance tax is levied on property or cash that somebody acquires by means of a gift or, well, inheritance.

If someone inherits your winnings they will be liable to inheritance tax so long as your estate is large enough. You might choose to get around this tax by giving your money away.

You can give away a tax free £3,000 annually to a person or even dish out up to £250 away in a gift to anyone you like so long as it is no more than £250.

Even if you do give your money away to a charity, it can still be taxed should you die within 7 years of your donation. Should you live longer than those 7 years, all monies will be exempt from the inheritance tax.

The threshold for this tax is £325,000.

Does This Only Apply To Big Amounts?

Does Uk Tax Gambling Winnings Real Money

Not necessarily. You may have say £20,000 in gambling winnings saved as cash or assets, which of course would not be enough to be liable for inheritance tax on its own. If, however, the rest of your estate was worth over £325k then this money, no matter its source, will be added onto the top of that amount and if that takes you over the threshold there will be tax to pay.

Even if you use gambling winnings to buy a house and give this away in your inheritance it does not matter, the value of the house (or assest) will still be calculated as part of your estate.

Does Uk Tax Gambling Winnings 2019

The choice if you are in the situation is either to give your money away in small amounts over a number of years or face the fact it could be liable for inheritiance tax.