The gambling tax explained. The UK gambling tax system is very advantageous to players. Not only does it work out in your favour, but it is also incredibly easy to understand. Whenever you gamble in the UK, you are not required to pay any tax whatsoever. I’ll cut right to the chase: yes, you do need to pay federal taxes on gambling winnings in the United States. This is especially true when you net a big win and receive a W-2G form. According to the IRS, a gambling establishment should issue a W-2G when you win an amount that’s subject to federal income tax withholding (24% of win). Well, good news: when it comes to UK-based gamblers, there is no tax to pay on your winnings – even if you win a million pounds. The position with tax has changed several times over the past 20 years or so but punters have been exempt from paying tax for a long time now, with the tax burden falling on the bookies and betting sites instead. 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.
Whether you gamble no more than a few quid per year or are an internationally known poker player, the United Kingdom is a great place to call home. Not only is gambling completely legal and fully regulated in the UK, but you’ll be able to keep whatever you win. Although it might seem hard to fathom, gambling winnings are tax free for players in Scotland, Wales, Northern Ireland, and England. As you might expect, HM Revenue and Customs have no reason to cry poor, as they claim a sizable share by levying duties on gambling operators. Keep reading to learn all about the tax situation in Britain.
Is Gambling Taxable In The UK?
No, gambling is tax free in the UK. While players in some countries such as the USA, France, and Macau have to deal with gambling taxes between 1% and 25%, bettors in the United Kingdom have the privilege of keeping the entirety of their winnings. As a matter of fact, both online and offline gamblers in Britain don’t have to waste their time thinking about taxes. If you’ve been gambling for a while, you might recall dealing with betting duties years ago, except Gordon Brown, who was Chancellor of the Exchequer at the time, scrapped that tax in 2001. Thanks to the sudden rise and perceived threat of offshore betting earlier this century, the government was effectively forced to enact several changes. Yet this move was just one of many important developments. The government also passed the Gambling Act 2005, established the UK Gambling Commission, and started regulating online casinos.
If you live in England, Scotland, Wales, or Northern Ireland, your gambling winnings are tax free whether you play live or on the internet.
Did you know the UK government makes a virtual killing from gambling? In the 2017-18 fiscal year alone, Her Majesty’s Revenue and Customs raked in £2.9-billion in gaming-related duty. Although that figure includes lotteries, betting, and live as well as remote gaming, that’s an astronomical amount. A great deal of that revenue comes from the 15% tax levy gambling operators must pay. While you don’t have to worry about paying taxes when you win or lose, the government does tax betting shops, poker rooms, casinos, and other related establishments on their profits. Even though players don’t pay these fees directly, in many ways they are built into the odds. Nonetheless, it’s nice that you can concentrate on playing your favourite games instead of dealing with complicated tax forms.
- UK players do not pay taxes on their gambling winnings.
- The previous betting duty was abolished in 2001.
- Gambling sites now pay a 15% levy on their earnings.
- The government netted £2.9 billion in gambling duties during 2017/18.
- HMRC draws no distinction between pro and amateur players.
- If you gamble outside of Britain you may need to deal with foreign tax laws.
- The current tax code applies to online and offline betting.
Placing Your Bets Offshore
If you’ve gambled online, you’ve likely noticed that the industry continues to evolve. That’s true whether we are talking about the quality of the games, technological aspects like mobile betting, or regulatory and tax issues. As you might know, many of the sites that operate in the United Kingdom are based offshore. Some of these offshore operations were originally based in Britain, but quickly realised they could reduce their tax burden by locating their servers elsewhere and incorporating in a tax-free jurisdiction.
In order to counteract these moves, the UK Gambling Commission now requires all sites that welcome British customers to be fully licensed, whether they are physically based in Britain or elsewhere. In addition, these sites must also pay the same 15% tax as their British counterparts. Of course, as a player you won’t have to deal with these taxes. Nevertheless, a level playing field reduces the odds of the government making changes that negatively impact bettors.
Does Uk Tax Gambling Winnings Money
Are Professional Gamblers Taxed On Their Winnings?
No - HM Revenue and Customs do not make a distinction between casual and professional players. Even if this may be subject to change in the future, at the present time gambling isn’t a recognised trade.
If you are a professional poker player, chances are you’ve already consulted with an accountant. Even so, there are a couple of points to consider. If you play outside of Britain, you may have to deal with local taxes. For example, if you win money in Las Vegas you could be subject to a federal withholding tax, although you can often apply for a refund as a non-resident. Also, if you become a poker celebrity and get paid for public appearances or representing an online cardroom, you could be subject to taxes but not on your winnings.
Keeping Records of Your Play
Although you don’t need to declare your gambling income on your tax return in the United Kingdom, successful poker players and other professional bettors often maintain personal records of their wins and losses. While this might seem like a waste of time since your winnings are tax free, there are a couple of benefits to keeping some sort of performance log.
It’s always smart to know how much you actually spend and win while gambling. Don’t you want to know how much profit you’ve made after you factor in your losses and other expenses like travel, meals, and lodging? If gambling is your sole source of income, you could end up raising several red flags if you drive to the shops in an Aston Martin. Having gambling records will be ample proof that you aren’t hiding income from taxable sources.
Frequently Asked Questions About Gambling Taxation in the UK
How much are gambling winnings taxed?
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.
Is gambling income taxable?
If you are a resident of the United Kingdom, your gambling income won’t be taxed. Unlike other countries such as the USA, you’ll be free to keep whatever you win in Britain even if you are a professional poker player. At the same time, you can’t deduct any losses you might accrue.
How much money do you have to win at a casino to pay taxes?
It doesn’t matter if you win £20 playing fruit machines or £2-million in a poker tournament. Your winnings will be tax free if you live in Britain.
Are blackjack winnings taxed?
No - If you live in the United Kingdom, you won’t need to pay taxes on any money you win playing blackjack.
Are gambling winnings taxed in Scotland?
No - Scottish players can win big without worry about taxes. If you live or gamble in Scotland, you can keep whatever you win.
Will my winnings be taxed if I live in Northern Ireland?
No - You won’t need to pay taxes on your gambling winning if you are a resident of Northern Ireland.
Do I have to pay tax on gambling in England?
No - As a player, you are not required to pay tax on gambling winnings in England. The government does generate sizable revenue from betting, as casinos, bookmakers, and other licensed gambling operators do pay taxes on their profits.
Are gambling winnings taxed in Wales?
Does Uk Tax Gambling Winnings Real Money
No - Gambling winnings aren’t taxed in Wales. You’ll be able to keep whatever you win whether you bet online or at a local venue.
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Many people worry about the tax implications of that big winning bet, especially those for whom gambling is more than just a bit of fun, the lucky few who make a consistent profit from betting. Well, good news: when it comes to UK-based gamblers, there is no tax to pay on your winnings – even if you win a million pounds.
The position with tax has changed several times over the past 20 years or so but punters have been exempt from paying tax for a long time now, with the tax burden falling on the bookies and betting sites instead. The main reason for this is the argument that if tax was due on winnings it would be hard to argue against relief on losses and so the government decided it would be easier simply to tax the bookmakers on their profits.
Even professional gamblers, or those that use complex gambling systems to all-but guarantee a profit, are totally exempt from paying tax on their winning bets. All you need to do now is find some winners – and those profits are all yours!
Bookmaker Taxes & Duties
It wasn’t always this way, however, and the method by which betting is taxed in the UK has been changed a few times over the years. When betting shops were first legalised in the 60’s there was a tax known as betting duty which had to be paid on every bet – either on the stake itself, or on the winnings. This tax was a flat 9% for all punters.
Gordon Brown was responsible for abolishing betting duty in 2001 after betting started appearing online in an attempt to encourage punters to continue to bet in the UK rather than through an offshore bookmaker where there was no duty to pay.
The revenue lost by the treasury from the abolition of betting duty was countered by the introduction of a 15% tax on a bookmakers gross profits – effectively shifting the tax from the punter to the bookie.
In response, many bookmakers moved their online operations (or parts of them) overseas and took up residence in Gibraltar or Malta, both of which had licensing agreements with the UK which allowed companies based there to legally offer betting services to customers in the United Kingdom but didn’t have to pay the 15% levy on profits.
Point Of Consumption Tax
This changed in 2014 when a new law was passed requiring all online gambling sites which accept UK custom to be licensed in the UK, regardless of where they were based. The new rules also saw the introduction of a 15% point of consumption tax for any wagers taking place in the UK, and levelled the playing field for UK and non-UK based operators.