The United Kingdom regulates their gambling industry, making it safer for you to play while also offering some of the world’s best casinos – online and offline. As a player, one of the questions you might be asking is, “Do you pay tax on gambling winnings in the UK?”
If you’re from the United States or France, you might be shocked by the answer.
Are Gambling Winnings Taxable in the UK?
No. There was a time, back before 2001, when a gambling winnings tax existed. Betting duties were removed by Gordon Brown before the Gambling Act 2005 was even signed into law. You can win £20 or £100,000 and won’t have to pay a single pound in gambling tax.
You won’t have to pay gambling tax in the UK if you live in the following countries:
- Northern Ireland
Players from these countries won’t have to pay tax on gambling winnings, but there are taxes for gambling operators. The casinos that you play at will have to pay a 15% tax on their revenues.
If you’re from the UK and play online, possibly placing bets offshore, you may be wondering how taxation works. The good news is that the UK Gambling Commission will not levy any taxes against you.
A lot of online casinos decided to move their operations out of the UK to avoid the 15% taxes that they faced. When these businesses moved jurisdictions, they were avoiding some taxes at first. The Gambling Commission decided to require all online casinos offering gambling options to British customers to:
- Remain fully licensed
- Pay 15% tax
The UK uses a Point of Consumption tax to ensure that casinos pay their taxes. This change took effect in 2014 due to offshore companies avoiding taxes.
Players don’t have to worry about these taxes, but the UK collects billions of pounds annually in tax revenue from casinos.
Unless you plan on opening and operating your own casino, you’ll have no tax concerns as a gambler in the UK.
Do Casinos Pass Taxes on to Gamblers?
Since operators and bookmakers want to reduce their taxes, they often do one of two things:
- Lower the odds of winning
- Increase wagering requirements
The casinos are able to generate higher revenue using these tactics, leading to higher profit margins even after paying taxes. As a gambler, you need to calculate the risks, especially the odds, to see if a game is worth playing or not.
Downsides for Professional Gamblers
No one wants to have to pay taxes on their winnings. You want to keep as much money in your own pockets as possible. One issue with no taxation is that you also won’t be able to deduct the losses that you accrue.
When gambling in other countries, it may be possible to deduct losses to save you money come tax season.
Casual players do not need to worry about these deductions – unless they’re high rollers. Oftentimes, not having to pay any tax on winnings is far more beneficial than having the option to deduct potential losses.
Do I Have to Declare Gambling Winnings in the UK?
No, but if you live outside of the four countries listed in the first section, you may have to pay taxes on your winnings in your home country. Each country has its own rules and regulations for taxing gambling winnings, so be sure to research your own country’s laws.
Professional players often play in the UK from around the world.
Local taxes can be imposed on winnings, but the UK doesn’t impose these taxes. Your accountant is the person best able to help you pay the appropriate taxes in your home country.
What Taxes Do Neighbouring Countries Pay?
As a player from the UK, you’ll be saving a lot of money by avoiding taxes. A lot of countries do impose taxes, often high, on winnings. A few examples of how much money you’re able to save by being in the UK are:
- 2% on poker cash pots, which France imposes
- 29% in the Netherlands on any winnings over £454
Spain will require you to add all of your winnings to your taxable income for the year.
If you’re a UK citizen and plan on playing at a casino abroad, you may or may not have to worry about taxes in these countries. The UK has done a great job in signing treaties with other countries that allows UK citizens to avoid having to pay taxes in other countries.
Why Did the UK Eliminate Gambling Taxes?
Since taxes are imposed on regulators, the country still receives billions in revenue annually. The government decided that it was in everyone’s best interest, players and the government, to not have to deal with taxing casino winnings.
When taxable, the government would also have to allow players to claim losses on their tax returns, which are also complicated.
Since a lot of British players try their hand at online gambling, and a lot of people lose, the ability to deduct losses from taxes would slow down processing. For players, it’s better that operators pay taxes on their revenues.
This is why many people expect that taxation will not return in the near future. While it’s possible that taxes can return, it’s unlikely due to players being able to claim deductions on their losses. If deductions are claimed, there’s a chance that the government will have their overall gambling tax pot reduced – the government doesn’t want that.
Of course, let’s assume that you won a million pounds and invested your winnings. You would have to pay taxes on any income generated through these investments. There’s also the concern of inheritance tax, which can be taken from your estate on your demise.
So, while gambling winnings may be tax-free, if you win big, you may want to consult with an accountant to reduce future tax liabilities.
Gambling taxation in the United Kingdom is one of the simplest in the world. Since you aren’t required to pay taxes if you’re from England, Northern Ireland, Scotland or Wales, it’s one of the most favourable countries to gamble in as a player.