UK Gambling Taxation 2023
According to the Gambling Act 2005, gambling is classified as Casino activities, Bingo, Betting, Lotteries, Gaming Machines, and Arcades. So, will your gambling winnings be taxed in the UK? You’ll be pleased to hear the answer is no.
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Are my gambling winnings taxable
Since HRMC does not consider gambling a form of taxable activity, your winnings are not taxable. You are free to gamble and win as much as you can and you are not required to pay any tax on such winnings. So, if you can walk away from the tables with £50 or £2 Million and know that the money is entirely yours!
Why am I not taxed I hear you say? Well, the UK government states that to do so would bring in negative tax revenues which is, of course, the opposite of what taxation is supposed to achieve. The UK government also understands that to tax people for gambling winnings would require a system to credit for losses and since total winnings are obviously less than total losses, the government would pay out more credits than they’d ever receive in revenue.
There is a small exception, however, if you nominate spread betting as a primary source of income. In this case you may become classified as a trader and would be liable to taxes. You may also face taxation if you decided to leave your gambling winnings as an inheritance or you decide to gift it to another person. If your estate exceeds £325,000 the winnings would be liable to inheritance tax and you can only give £3000 pounds to any one-person tax free each year.
Do I need to declare winnings
Thankfully, lucky players in the United Kingdom are not required to declare their gambling winnings for tax purposes. According to HM Revenue & Customs (HMRC), gambling is not considered a taxable trade or activity and therefore you do not have to declare any winnings. You can win a million pounds at the tables and would not have to declare it to HMRC.
However, it is good practice to keep a record of large winnings, in the event you are investigated are need to prove how you have more money than you earn. You’ve done nothing wrong but HMRC may want to find out why you traded your transit van in for a Lamborghini.
Are Professional Gamblers Taxed on Their Winnings?
But what if you make your living from gambling? Once again since HMRC does not list gambling as a taxable trade or activity, your gambling winnings as a professional gambler are still not taxable. This includes professionals whom have a system that all but guarantees winnings.
However, professional gamblers should declare their winnings on their tax returns. You won’t be taxed by doing this but it provides proof of your earnings. If you cannot prove how you came into large amounts of cash, you may be audited or have to pass fraud checks when making large purchases such as real estate or a car.
When UK betting shops were first legalised in the 1960s users had to pay a betting duty tax of 9% on every bet. In an attempt to prevent UK gamblers from betting through offshore online bookmakers, the betting duty was officially abolished in 2001 by Prime Minister Gordon Brown.
The abolishment of the betting duty tax changed the British gambling landscape with an additional taxation on bookmakers that saw an influx of bookmakers taking up residence abroad and offer betting services legally to the UK without paying UK tax. The British government then passed the Gambling Act 2005 and establish a Gambling Commission in order to regulate online casinos.
What if I Don’t Live in the UK?
But what if I don’t live in the UK and I gamble during a holiday? You won’t have to pay tax on the gambling winnings in the UK but your own country may have laws regarding taking winnings from another country back home with you.
You should also remember that if you take a windfall in cash you may need to declare it when travelling. If you leave the UK to a non-EU country, you must declare any cash over €10,000.
Operator Point of Consumption Tax
You don’t have to pay tax on your winnings but the operators still deal with the tax man. Following the abolishment of the betting duty tax in 2001, a 15% tax was imposed on the gross profits of UK bookmakers. Many operators took to moving their operations abroad to countries such as Malta, Gibraltar or Alderney and obtaining a licence to operate in the UK. This exempt those operators from paying the 15% tax on any profits.
However, in 2014 the UK amended the Remote Gaming Duty to require all online gambling operators which accept UK custom to be licenced in the UK and introduced a 15% “point of consumption” tax on all wagers that are made in the UK. The Point of Consumption tax was raised to 21% in 2019 as a means to increase operator contributions towards public finances.
So, there it is folks – Your gambling winnings are not taxable in the UK. You can win as much as you like and will not have to give any of it up to the taxman. Changes in UK legislation to gambling taxation will have an effect on those winnings though.
The increase in Point of Consumption tax for the operators will see poorer odds and return to player amounts for UK gamblers since operators will try to pass on the new costs to the customers. We have also yet to see the full effects of Brexit with more operators leaving the UK market to avoid this tax increase, but we're hoping that this casino feature is here to stay.
We make sure we thoroughly research all our articles, and with important topics covering legal requirements and changes, doubly so! Check out some of the sources we've used to help us get the facts straight:
No. If you are ordinarily resident in the UK your gambling winnings, no matter how large, are not considered taxable by HMRC.
No. You do not have to declare any gambling winnings to HMRC. However, it is good practice to do so, especially if you are a professional gambler or have particularly large winnings, as you may need to prove how you obtained large amounts of money.
You do not need to declare your winnings in the UK but you may need to when leaving the country or to satisfy your home countries laws.