Gambling has been a popular pastime in the United Kingdom for many, many years – from the old days of betting on the horses at traditional betting shops with cash – to the modern way of placing a wager on football at online gambling sites that accept Trustly.
The way we bet may have changed – but one thing hasn’t changed. Taxes. As the saying goes, there are two certainties in life – death and taxes. But how does taxation work when it comes to gambling?
Gambling Taxes in the UK
The good news is that, in the United Kingdom, gambling winnings are generally not taxed. Whether you land those wins through poker, sports betting, or even progressive jackpot games, players won’t have to pay any taxes on their winnings.
This principle applies to all different forms of gambling – online and offline. However, it’s not necessarily as straightforward as all that. While those who gamble for fun can enjoy tax-free winnings, this isn’t true for everyone – and there is, indeed, a lot of tax revenue that comes from the gambling industry. That being said, the UK government generally relies on taxing gambling operators rather than individual players.
Professional Gamblers
Whilst those who gamble for fun won’t be taxed, professional gamblers in the UK may be taxed on their gambling income. The distinction between whether you are a professional or recreational gambler is hugely important.
If you cross that line where gambling becomes a major source of income, you could find yourself being classified as a professional gambler. In this case, you may be subject to taxation on your winnings.
The main factors to consider when working out, whether this is you, include how regularly you gamble – along with how organised and systematic you are with your gambling activities.
If you do fall into this category, you will need to navigate the complexities of taxation, potentially involving not just income tax but also National Insurance contributions and other financial considerations.
National Lottery and Other Gambling Taxes
The UK government will tax gambling operators rather than individual players. Gambling operators include casinos, bookmakers, and online gambling platforms – and these are subject to all sorts of taxes and duties, including:
- Remote Gaming Duty (RGD): This is a tax that is imposed on the gross gaming yield (GGY) of remote gaming operators that provide services to UK customers. It applies to both online casinos and sports betting. RGD is put into place to make sure that remote gambling operators contribute to the UK government’s tax revenues.
- Betting Duty (BD): This tax is applied to the profits of bookmakers and betting exchanges located in the United Kingdom. It is levied on their gross profits to ensure that a decent portion of the revenue they get from UK gamblers will go into the country’s tax revenue. Betting Duty was replaced by General Betting Duty in 2001.
- National Lottery Duty (NLD): There is also the National Lottery Duty (NLD), which is a tax that is imposed on operators running the National Lottery in the UK.
Tax on Promotional Offers
There are numerous gamblers who like to take advantage of all the different promotional offers and bonuses that are provided by gambling operators. While the winnings from these offers will usually be tax-free – if you are a recreational gambler, professional gamblers may face taxation on winnings that come from these offers.
Again, if gambling is your main – or one of your main sources of income – and you consistently profit from such promotions, the tax authorities may view it as part of your taxable income.
Offshore Gambling
Playing at offshore casinos is legal for UK residents. However, this can be where the tax situation becomes a little more complicated. Any winnings you get from overseas gambling platforms are generally not taxed in the UK. However, you should be aware of the tax regulations in the jurisdiction where the operator is based, as different countries may have varying rules.
Keeping Records
Whether you gamble for fun or as a way to earn proper money, you will need to make sure you keep accurate records of your gambling activities. If you ever face questions from tax authorities, it’s always a good idea to have proper records of your wins, losses, and expenses.
Get Professional Advice
If you are in any doubt at all, you should get professional advice. Tax laws and regulations can be tricky – and they could change over time. If you do find yourself with substantial gambling winnings – especially if gambling is a big part of your income, it’s a good idea to get professional advice from an accountant or tax consultant. They can give you the guidance you need – based on your specific situation – as you won’t want to fall foul of the tax laws, as this can be devastating.
Conclusion
As you can see, most UK gamblers can enjoy their winnings without having to line the pockets of the taxman – thank goodness. However, this isn’t the case for professional gamblers and potentially those using offshore sites.
If you are in any doubt, make sure you contact a professional for help so you don’t find yourself on the wrong side of the HMRC.
