We sincerely hope you landed on our page right after bagging yourself a huge jackpot and celebrating your great success. If so, first of all – congrats on your winnings. If not, well, there’s always next time, right? Either way, we are here to answer the all-important question: are gambling winnings taxable in the UK? We’ve put together a brief and informative guide on taxes and gambling laws in the UK. Let’s dig right in.
Is Gambling Tax-free?
You’ve talked through everything you knew about online gambling and brick-and-mortar casinos, chosen your favourite one, and decided to lay down your bets over a pint or two. And, oh the joy – you’ve earned some cash. Now here comes the horror – do you need to part with some of it in order to pay taxes? The good news is – no, you don’t pay tax on gambling winnings in the UK.
We agree it’s quite shocking to find out that the UK Government doesn’t want a slice of the pie from the gamblers, but let’s walk you through all the important facts first. It doesn’t matter if you’ve won £100 or hit a jackpot worth millions – your winnings are not taxable. The same rule goes for all types of gambling; Be it bingo, slots, horse racing, or the national lottery, you’ll be entitled to the whole sum of the money won. Depending on the casino you’re gambling with, you might get your winnings in one single payment or monthly instalments, so make sure to check the “Terms and Conditions” section on its website.
Placing Your Bets Outside the UK
UK residents don’t pay any tax on prize money in the UK. But what about UK citizens who reside in a different country or gamble abroad? Punters should be aware of the gambling tax laws in the country of their preference and check its regulations ahead of time. For example, If you’re in the US, your winnings will be subject to a flat 24% tax. In Spain, you would have to declare your gambling winnings as taxable income. In France, you would be charged a 2% tax on poker cash pots, and if you happen to win more than €454 at the national lottery in the Netherlands, be ready to part with 29% of your prize money.
Luckily enough, most countries have treaties regarding taxing gambling winnings with the UK, so you likely won’t have to pay taxes as a UK citizen. However, make sure to check each country’s regulations. Also, if you place your bets offshore in one of the many online casinos popular in the UK but based elsewhere, the authorities have that covered, too. The UK Gambling Commission has regulated the market, and all of the online venues are required to pay the same 15% tax as their UK-based counterparts. UK players, however, are not subject to any tax on betting.
Tax on Bank Interest
Before you get all hyped up because you don’t need to pay tax on your gambling winnings (or start searching for good betting sites in the UK to try your luck if you haven’t won anything yet), we’d like to mention an often overlooked piece of information. Namely, even if the government won’t charge you (at least not directly), the banks do like to get dues. Whether you get your prize in an online venue, a national lottery, or a brick-and-mortar casino, you will have to pay tax on some of the interest that your newfound wealth has started earning while deposited in your bank account or trust fund.
With gambling winnings, your tax worries don’t start unless significant interest has already been accrued. In the UK, basic rate taxpayers can pile up to £1,000 in interest per annum without having to pay any taxes. Higher rate taxpayers can earn up to £500 in interest during one tax year without any taxation. If they exceed the designated sum, they are obliged to pay tax. In other words, no matter where you put your winnings, they will be tax-free, but you are likely to get charged for the interest accrued.
What About Professional Gamblers?
You’ve probably heard about random Brits who won enormous sums on the lottery or those lucky or skilled professionals who managed to earn a living from gambling. According to HM Revenue and Customs, even though a person is a professional gambler, the tax won’t be subtracted from their gambling revenue. HMRC states that if a taxpayer’s primary source of income is offline or online gambling, it doesn’t constitute trading and is not taxable.
However, there are situations in which professional gamblers can be subject to tax. Those who become, let’s say, poker celebrities might start earning additional income from public appearances, playing at particular tournaments, or representing an online cardroom. The money made this way would be liable for taxation. The winnings remain tax-free, though.