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Do I Pay Tax On My Online Gambling Winnings?

So – you’ve been playing online bingo, slots and casino games for a while, and you’ve finally struck it rich. You’re taking away a big win – which is fantastic news!  However, if you are playing games in the UK, you may be wondering whether or not you are entitled to the full sum you’ve won at a given site. There’s no need to worry – the facts are fairly simple, even if the law they are base din can be a little complex at times!

Do you pay tax on online gambling winnings? You do not have to pay tax on your online gambling winnings in the UK. 

Legislation

It’s always a good idea – naturally – to stay within the realms of UK legislation.  Otherwise, you may find that your gambling winnings are taken away! That’s why we only ever highlight gaming sites and brands which are fully regulated within UK law.  However, when it comes to paying tax on gambling winnings, that’s a different matter entirely.

In this guide, we will make sure to answer the question – are gambling winnings taxable UK and elsewhere – and we will hopefully help to ease your mind as to what happens next with your big cash win. Don’t let worries about taxation and the law get in the way of your big gaming win! Here’s the full lowdown so you know exactly where you stand.

There’s no need to let tax worries get in the way of your fun – particularly when we have some pretty good news for you on that front.

The Law

Gambling winnings and the law have a long and varied history.  Ultimately, the short answer to the question above is, no – you won’t be taxed on gambling winnings.  However, this wasn’t always the case.  In fact, people were subject to rules which were a lot harsher for decades!

Tax

As far back as 1960, UK legislators moved to ensure that any money won in bookmakers across the country would have a 9% tax imposed.  For a long time, this was a huge burden on people who continued to win large sums of money!  Therefore, imagine the relief – as, in 2001, then-Chancellor of the Exchequer Gordon Brown elected to remove the tax completely.  However, that didn’t mean HM Revenue and Customs were to ignore gambling money altogether.

Brown changed the rules so that bookmakers, instead, paid higher dues.  This meant that betting shops and brands would have to pay a levy of 15% on ‘point of supply’ profits.  This wasn’t exactly welcome news for bookies in the UK, and due to a loophole of being able to set up shop overseas, many bookmakers chose to shift operations to offshore locations.

Percentage Of Profits

This, however, changed again in 2005.  Offshore firms and those based in land were then required to pay 15% on profits made ‘at point of consumption’.  This helped to tighten up UK gambling licensing, which meant companies already established offshore would have to submit to paying higher taxes to continue operating.

However, this has only helped to spur the industry on – and as you can see, online betting and gambling has never been bigger in the UK.

HMRC Gambling Winnings

HMRC gambling winnings may be something you feel you need to declare.  However, there is nothing enshrined in UK law to suggest that you will need to pay tax on any wins.  You could win as little as £10 on Lotto, or even £100,000 on a progressive jackpot game.  Regardless, you won’t be required to pay any charges on top.

However, gambling tax may vary if you’ve won big money elsewhere.  Depending on the UK’s relationship with the country you have won a prize in, you may not have to do anything.  However, issues such as Brexit, for example, may have an impact on whether or not tax will be expected from UK winners while abroad.

Do You Pay Tax on Gambling Winnings UK Sites or Elsewhere?

This can vary, and it will depend on where you play, what you play, and how much you win.  For example, Spanish gaming sites and lotteries have a taxation system in play.  This means that winners – whether they take home small prizes or big jackpots – will need to make some form of declaration to the state if their cash is to remain legal to be kept.

As stated, the rights of the average UK winner may vary.  However, we can’t stress enough that you will need to look into the various conditions which come attached with various winnings.  Even if you intend to win big, regardless of your chances, it’s a good idea to see what a site’s policy is when it comes to large wins and whether or not you can keep all of it.  You may think it’s tempting fate slightly – but it’s absolutely crucial that you prepare for every eventuality.

Don’t let this put you off gambling and playing for big prizes outside of the UK, however!  There are plenty of great opportunities on the continent and across the US and Australia for big cash prizes.  Whether you choose to play in international lotteries, or are a poker player on tour, don’t feel you should have to restrict yourself to the British Isles.

Professional Gambling and Tax

When it comes to professional gambling, it’s important to know where you stand.  For example, you may be a poker player who heads to international games to make a living.  However, believe it or not, the law is even more on your side.

HMRC

HMRC outright states that professional gambling incurs no tax, no matter how much you earn.  Their business income manual advises that gambling activities do not constitute a ‘trade’, regardless of whether or not you treat casino winnings or sports betting as your main source of income.

This is fantastic news, as it means you are well within your legal rights to continue playing for regular cash even if it’s your main finance stream.

Overseas

Do, however, always be careful, again, when it comes to playing poker professionally or gambling for income overseas.  This may vary in terms of who owes what, so be sure to get clued up in your specific territory of play.  In many cases, providing the UK has an agreement in place with that territory, you shouldn’t have to declare anything to local authorities.

This is great news if you regularly make a lot of money from card games.

Who Pays the Tax?

You may well be wondering who is responsible for paying tax on gambling, if not yourself!  Ultimately, thanks to changes in the law, it is the games providers who will be footing the tax bills, not the players.  As mentioned, a 15% levy on all bookmakers holding a UK licence has forced the hands of many gaming institutions.

Certain rules will apply to casinos, too, which means they all have a little extra to pay since the turn of the millennium.

Brands

However, this doesn’t mean you get away so easily.  Any money betting or gaming brands lose from tax may be earned back through certain requirements expected of you.  Therefore, there will always be a way for bookies and casinos to make their money.

There are several different types of duty which are placed on gambling and gaming bodies, which means they will need to focus on making money more than ever before.  In an industry where consumers play to win cash, that’s not always simple.

Don’t Worry

But really don’t worry – casinos and bookmakers have to make their terms and conditions widely known to their players, which means there will never be any underhandedness providing they are fully regulated and authorised.

It’s illegal for casinos and gaming firms in the UK to operate without some form of licence or regulatory body overseeing matters, so be assured that terms will be above board, even if it means you paying the cost somewhere in the fine print.

Tax on Gambling Winnings UK

It’s reasonable to wonder about tax on gambling winnings UK sites and gaming brands expect from you.  After all, the law has changed so much over the years, it’s hard to know exactly what to expect.  However, on the whole, you can rest easy.

Gambling is completely free from tax on UK shores, but do bear in mind that other levies and tax expectations may arise if you choose to share your wealth, or to give most of it away.  Unfortunately, extra duty may well apply depending on how you aim to spend your winnings – as bizarre as that may seem!

Online Games

You can play bingo, slots games, casino titles and more online without having to worry about the amount you need to declare to HMRC.  You can continue filing reports with HMR Revenue and Customs without the need to let them know about how much you may have won on the lottery, or that big jackpot win you took away from a casino.

At present, the law is clear – you’re exempt, and many players are hoping that this continues for a long time to come.  We will be the first to let you know, of course, if not.