Gambling was legalised in the UK in 1968 with the introduction of the Gambling Act. In 2005, the act was amended to include regional and online casinos. Casino operators pay 2.5-40% of their gross gaming revenue. Online gambling. So you might be wondering, do I have to pay tax on my online gambling winnings? This will depend on your location. Furthermore, losses from other gambling activities, such as casinos, horse racing, or regular sports betting, could also offset fantasy sports winnings. To date, the IRS has not weighed in as to whether fantasy sports winnings are gambling or hobby income. Without guidance, an argument could be made for either position. Gambling wasn’t always tax-free however—check out the section below for a summary of the history of gambling and taxes in the UK. History of Gambling Laws Betting shows were first legalised with the 1960 Betting and Gaming Act, in which a tax was levied either on stakes or winnings in high street betting shops.

Those who gamble, especially those who are very new to it or, conversely, those that do it an awful lot, often wonder if there are any tax implications involved with gambling. The short, simple and wonderfully sweet answer is that no, there is no tax at all to pay on either gambling winnings or stakes in the UK (if you are not based in the UK please check your local jurisdiction).

This was not always the case, you might be unsurprised to hear, as the government is never one to miss a chance to squeeze an extra few quid out of us when they can. Betting shops were legalised as part of the liberal mood that swept the country during the 1960s but a tax was levied, either on the stake or winnings (as decided by the punter prior to bet placement). This was charged at 9% but was abolished by Gordon Brown in the March budget of 2001, with the changes coming into effect on January 1st 2002.

Taxing Offshore Betting Sites

The then Chancellor was concerned that the country was losing revenue – not to mention jobs – to offshore gambling sites which people could access via their phones or the internet. Many of the big UK brands had moved offshore where they could take bets without the punters being taxed and Brown’s move was designed to stop that. The tax on the gambler was replaced with a 15% levy on the gross profits of bookmakers and since that momentous day over 10 years ago there has been no tax at all for punters to pay no matter how much they win from gambling.

This has had many ramifications and one is the growth of financial betting as an alternative to conventional investment mechanisms, the former offering tax free winnings, the latter subject to standard tax laws. It has also made UK-based bookies and betting shops far more competitive and has been instrumental in the growth and success of the UK gambling industry.

Follow up legislation further strengthened the domestic market by levying the same 15% tax that UK-based companies face against those based offshore. Remote gambling operators with UK customers currently benefitting from their bases in offshore havens such as Gibraltar and the Isle of Man now have to pay 15% tax on their operating profits. It was estimated to raise around £300m annually for the government and came into force in December 2014.

FOBT’s Stakes Down, Online Taxes Increase to 21%

In 2019, and after a long drawn out battle in both the media and houses of commons, the maximum stake permitted on Fixed Odds Betting Terminals found in high street bookmakers was reduced to £2 – a huge cut when you consider the fact that the previous limit had been £100.

Whilst the cut in stake was primarily intended to help protect vunerable and problem gamblers it also had the knock on effect of reducing the tax revenue generated by the machines. To compensate for this the UK Government chose to increase the 15% tax rate to a whopping 21%.

Despite the increase, crucially, this has no real impact on us as punters. To go back to the very simple answer as the beginning of this piece – gambling profits and stakes in the UK are still totally tax free.

Are Gambling Winnings Earned Income Uk Tax

If you’ve ever won a jackpot through bingo, slots or the lottery, you might have wondered if your winnings are taxable...

If you find yourself lucky enough to win big, do you have to declare it and pay taxes? If that thought has ever crossed your mind, you’re in luck because BingoPort has you covered. We’ve put together a guide that will answer whether your winnings really are taxable, a brief history of gambling laws and a look at how this might impact you.

So, if you’ve bagged yourself a big jackpot, congratulations! If you’re just here for the information, don’t worry—we’re sure your time will come someday.

Are Bingo Winnings Taxable?

The short answer is no—your gambling winnings aren’t taxable, at least in the UK. Here you won’t have to pay taxes on any of your winnings or stakes. It doesn’t matter if you’ve won £100 or £1 million. This applies to all types of gambling—from bingo, to slots, to lotteries, and even horse racing. So if you win big, you can rest assured knowing that you can spend your money in whatever way you’d like.

Depending on the site you’re using, your winnings will either be paid to you in one lump sum, or as a certain amount each month. If you’ve won recently, or you frequent a particular site, casino or betting brand, you should check their Terms and Conditions—this will lay out everything you need to know should your lucky day come.

If you don’t live in the UK your winnings might be subject to a tax, so it’s important that you check in advance. For example:

• France has a 2% tax on poker cash pots.
• In Spain, you need to declare winnings as income for taxation.
• The Netherlands has a 29% tax if you win more than €454 in the lottery.

If you’re a UK citizen and you find yourself gambling abroad, you generally won’t need to worry about taxes. Most countries have treaties with the UK, so you won’t be subject to their tax requirements.

Gambling wasn’t always tax-free however—check out the section below for a summary of the history of gambling and taxes in the UK.

History of Gambling Laws

Betting shows were first legalised with the 1960 Betting and Gaming Act, in which a tax was levied either on stakes or winnings in high street betting shops. This was charged at a whopping 9% for punters. It was abolished by Gordon Brown in his March budget of 2001.

This tax on gamblers themselves was replaced with a 15% tax on bookmakers and their gross profits at point of supply instead. This ‘point of supply’ basis meant that if a bookmaker wasn’t based in the UK, they weren’t liable however. This was a pressing concern for Brown, who feared that the UK was losing revenue to offshore gambling sites.

In fact, more and more bookmakers moved their online operations offshore where they would only have to pay the local tax rate on profits—this was capped at 1% in Gibraltar!

This changed with an amendment to the 2005 Gambling Act in 2014. From this point, the tax was changed to 15% on all gross profits at point of consumption—including offshore companies. This meant that gambling operators in Gibraltar and the Isle of Man for example, were now obliged to pay tax in order to obtain a gambling licence. This amendment essentially made it illegal to operate in the UK without a UK gambling licence.

This had a huge impact in making UK-based bookies and betting shops more competitive—increasing the growth and success of the gambling industry in the UK.

So, Why Aren't They Taxable?

To put it simply, it’s just easier for everyone involved to leave winnings untaxed. For example, if people are paying taxes on their winnings just like businesses do, then it would potentially be possible to claim back losses on tax returns. As you can imagine, this would be a nightmare, especially considering the fact that most people lose when it comes to gambling. After all, we all know what the 10 stages of losing at bingo are like!

Who Exactly Pays The Tax?

The casinos and bookmakers are the ones now paying the tax—this is the way they contribute to the UK’s economy. There are a variety of different taxes and gambling duties:

Are Gambling Winnings Earned Income Uk Calculator

• General betting duty
• Bingo duty
• Machine games duty
• Lottery duty
• Gaming duty
• Remote betting duty

Before you start thinking about how tough it must be for gambling businesses, or how great it might be for you, bear in mind that they do pass these costs on to you in some way. For example, some online gambling sites have high wagering requirements or lower odds.

What If You're A Professional Gambler?

When we say ‘professional gambler’, we mean someone who essentially uses gambling as their main source of income. But even if this is the case and you are a professional gambler, the answer is still no—your winnings are not taxable.

This is backed up by the HMRC’s Business Income Manual at BIM22015. Their position is that betting and gambling don’t constitute trading:

“The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade”.

Gambling winnings, therefore, remain tax-free, regardless of whether it’s your main source of income or a simple hobby. An example of this goes back as far as 1925, in which a man named Alexander Graham was taxed by Inland Revenue. Graham made a living out of betting on horses, so Inland Revenue claimed £300 from him under the 1918 Income Tax Act. This case went to court, where Graham’s lawyers argued that betting on horses couldn’t be considered a trade. The judge eventually ruled that you can’t tax “habit”.

Is Gambling Winnings Earned Income

That’s not to say that professional gamblers can’t ever be subject to tax. It can get a little bit complicated. For example, if a professional gambler is being paid an appearance fee for playing at a particular tournament, then this would be a type of income that would be liable for tax.

So, I Don't Have To Worry At All Then?

While your winnings aren’t taxable by any gambling laws, that doesn’t mean you don’t have to worry. After all, other taxes may still be applicable.

A problem that many lottery winners have is extra tax—particularly on the ‘bigger’ wins. Any income that you generate from your winnings could be subject to income tax—for example, income earned through investments would be subject to a capital gains tax at 18%! And that’s not all—your winnings might even be liable to an inheritance tax when you die.

An inheritance tax is levied on property or cash acquired by a gift or inheritance. The threshold for this tax is £325,000, so if your ‘estate’ is worth more than that, you’re looking at a 40% tax. While you can give your money away to people or charities, it’s still liable should you die within 7 years of the gift.

You can give away £3,000 each year tax-free to any one person, or £250 as a gift to someone as long as they’re not gifted any further. If you give more than this away and you die, it will be liable to this tax. If you live longer than the allotted 7 years, it will be exempt from the inheritance tax.

If you do end up winning big—whether it’s through bingo, the lottery or a casino—you should definitely look to a financial advisor for help on how to invest your money and how to protect it.

Before going out to buy your lottery tickets for the week, find out if the lottery is worth playing.

Conclusion

Well, there you have it. If you live in the UK, our tax laws mean that you can gamble tax-free, without a single worry. Generally speaking, it isn’t very likely that this will ever change—taxing gambling winnings will never be viable for the UK. After all, if you tax the income or profit made from an activity, you have to make allowances for any losses made from the same activity.

Now you know that, you can keep playing bingo without a care in the world!

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