It’s a question frequently asked by anyone who likes gambling – is there a tax on gambling, and do you pay taxes on gambling winnings? If you’re a UK resident, the short answer is no. Since 2002, taxes on winnings from gambling activities have been abolished, at least for the players. What that means in practical terms is that you can keep 100% of the money that you win – no gambling tax UK applied, no matter how big the win.
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History of UK Gambling Taxation
As with all matters of taxation, the full story is slightly more complicated than that. While your immediate winnings are not subject to tax, you may find yourself paying some levies further down the line. And if winnings are not taxed, from which part of the gambling industry does the government receive tax profits?
Without going too far back in time, prior to 2002 all bookies were taxed at a rate of 6.75%. This was passed on to punters at the increased rate of 9%, and it was up to the individual to decide whether to apply this tax to the stake or to any potential winnings. It seems that most customers chose the former option during this time.
What Changed with Gordon Brown
It was the emergence of new online casinos and new gambling sites that ultimately led to this tax on betting being abolished. Providers no longer needed to be physically based in the UK, and they started moving their operations out to jurisdictions like Malta and Gibraltar – from where they could offer tax-free gambling and betting to customers back in the UK.
Clearly this was not a satisfactory situation for the government, because it represented the loss of a major revenue stream. Gordon Brown, at that time Chancellor of the Exchequer, made the move to scrap the tax and encourage betting companies to stay in the UK. For the customer, betting was now entirely tax free – both on stakes and wins.
What the Situation Looks Like Now
This was great for players, but it failed to solve the problem for the government. The tax on gambling had been replaced with a 15% levy on providers, but this was payable at the point of supply – meaning that operators still only paid local tax rates for where they were based. In Gibraltar this was only 1%, capped at £400,000 – and companies continued to move all online operations abroad.
It was only in 2014 that this situation was rectified by changing the 15% tax on gross profits to the point of consumption. Now casino providers and bookmakers are obliged to pay tax to the UK treasury on profits from UK-based customers – whether they operate online or not. UK gambling licenses are only issued to those who comply.
Recent Updates to Gambling Taxation Law
It’s always worth remembering that laws regarding taxation can and do change, especially under different administrations. The most recent updates to the gambling law in the UK came in 2019, when the point of consumption tax was raised to 21%. This was in part to offset the lost tax revenue when the maximum stake at fixed odds betting terminals was reduced from £100 to just £2.
We don’t yet know what the long-term implications of this tax increase will be, but it may be that operators pass some of the resultant costs on to players, in the form of poorer RTP rates and odds. We will keep this page updated to reflect any subsequent changes which may come in following Brexit.
Some Interesting Statistics
Note that the 21% rate applies specifically to online casinos with players in the UK. Land-based gambling establishments are taxed according to their income, anything from 5%-25% for slots and 15%-50% for other games like poker, roulette and blackjack. The betting tax remained at the previous level of 15%, and lotteries have a special Lottery Duty of 12% on all money staked and paid out within a period of accounting.
Other Types of Gambling Winnings Tax
In the UK, unlike in the USA for example, there is no longer such a thing as a gambling winnings tax. However, there may be some indirect tax implications if you are lucky enough to win very big on any of the top casino sites. Invest it or put it in savings, and any interest you earn could be subject to some degree of income tax.
Other circumstances where you will be taxed are as follows:
- If you give gifts of more than a total of £3,000 in the course of a tax year, the value could be subject to inheritance tax.
- Larger gifts are taxed according to how long you live after the gift is given. If you die within seven years of the gift, a certain percentage of inheritance tax will be due on the gift. Spouses and civil partners are exempt.
These taxes only really apply to enormous lottery wins, so for most people this downstream tax won’t need to be taken into consideration. Gifts to charities and political parties are also not taxed.
Declaring Casino Winnings
No matter the size of your win, you neither have to pay any tax, nor do you have to declare your winnings on your tax return. However, if you have won a considerable sum of money, or if you win smaller amounts on a regular basis, then it is advisable to declare your winnings on your tax return.
This doesn’t mean that you will have to pay any tax, but it’s a good idea nonetheless, in order to stay transparent with the tax man about where your money comes from. You will find a specific field for this on your tax return. So, if you wish to make a large purchase in cash using your winnings, you have a record of where it came from and can prove that everything is above board.
Make Sure You Play at Licensed Casinos
Another important thing to note, regarding staying right with HMRC, is that you absolutely must ensure that you play at a casino which has a full UK gambling license and pays tax in the UK. All the online casinos featured on this site follow the strict rules set in place by the UK Gambling Commission (UKGC).
Tax on Gambling in Other Countries
If you have a gambling or betting win in another country, you may be subject to the taxation laws in that jurisdiction. For example, if you have a big win in Las Vegas, the IRS may withhold a percentage of your winnings before they are given to you.
- The good news is that most countries have a treaty with the UK, meaning that even if you are charged tax at the point of supply, you are entitled to claim it back when you return home.
- It’s always best to inform yourself about the tax implications of winning money in another country, as each has different rules.
- If you are a visitor to the UK and have a win at a casino here, you will not have to pay any gambling winnings tax to HMRC. Make sure to declare it when you return to your own country, as you may well be required to surrender a portion of it to the tax authorities there.
In all cases, if you are travelling in or out of the EU, the maximum amount of cash that you can carry is €10,000 or the equivalent in another currency.
Taxation for Professional Gamblers
For some people, especially expert poker players, gambling can be their main source of income. Even in this case, the UK government doesn’t recognise professional gambling as a trade, but rather a hobby. So, even if 100% of your earnings come from gambling, you will not be subject to any direct tax.
The Graham Case
This law goes back to the 1920s, when a British man named Alexander Graham was charged £300 in tax on his winnings from backing horses. He took the Inland Revenue to court, where his counsel successfully argues that such activities could not constitute a trade or business, even if they represented a primary source of income. Since that time, gambling has not been subject to income tax.
The Exception of Spread Betting
The only exception to this is on spread betting. While it’s unlikely that many people make a living on sports spread betting, it’s important to add this as a footnote. Spread betting falls under the jurisdiction of the Financial Conduct Authority (FCA), rather than the UKGC, but in the case of casual betting, winnings are still not taxed. If you declare spread betting to be your job, trade or primary source of income, then you will be subject to Capital Gains Tax at 18% – but you will also be entitled to write off your losses against tax.
FAQ
Are gambling winnings taxable?
No, there is no such thing as a gambling winnings tax in the UK, whether you play online at a licensed UK casino or in a physical establishment such as a high street bookie. Even if you win millions on the lottery, you are entitled to keep every last penny.
Who pays gambling taxes in the UK?
The casino providers are the ones who pay taxes to HMRC, previously charged at a rate of 15%, and now increased to 21%. Sports betting tax is still 15% for the operator. This is charged at the point of consumption, meaning that online casinos with headquarters abroad must still pay if they accept customers from the UK. Slightly different rules and rates apply to land-based operators.
Do professional gamblers pay tax on winnings?
No, HMRC make no distinction between casual and professional gambling. A ruling from the 1920s decided that gambling cannot be considered as a job or trade.
Do residents of Scotland or Northern Ireland pay tax on gambling?
No, the same rules apply to the whole of the UK regarding tax on betting and gambling. While it’s true that Scotland and Northern Ireland have some differences to English law, in this case it’s the same for everyone – and for Welsh residents as well.
Can I gamble tax-free in other countries?
It depends. While other countries do impose levies on gambling winnings, many also have treaties with the UK so that players can keep everything they win. Sometimes you may have to reclaim the tax when returning to the UK. Check the rules for the country where you intend to gamble in order to avoid any unpleasant surprises.
Are my winnings subject to other taxes?
They could be, depending on what you do with them afterwards. Once you invest, deposit or gift money from gambling or betting winnings, it is taxed in the same way as any other money – i.e. through income tax on interest or inheritance tax.
Why is there no tax on betting or gambling winnings?
Quite simply, because it is easier and more efficient to solely tax the operators than to tax the players. If HMRC were to impose a tax on winnings, it would open things up for claims against losses as well.
Will the current laws remain the same?
Unclear. As we have seen, there have been significant changes to the law in recent years. In October 2019 the tax rate for online casino operators was raised from 15% to 21%. So, it’s quite possible that more adjustments to the tax code will be made in the future. However, this is unlikely to directly affect players, since the imposition of a tax on gambling winnings is widely regarded to be more trouble than it is worth.
How does casino tax affect players?
Although players are not required to pay any direct tax on winnings, casinos may pass on tax increases to the customer in the form of less favourable return to player rates and betting odds.
