All countries and governments have their own online gambling tax policies and legislation so we need to look at this question from a global perspective. Firstly we’ll cover the situation in the UK and following that look at how things may differ in the rest of the world.
Gambling and Taxation. Essentially betting is ‘tax-free’ in the UK – the professional gambler is outside the scope of tax. This is confirmed in HMRC’s Business Income Manual at BIM22015. The basic position is that betting and gambling, as such, do not constitute trading. This is not a new precedent either. Latest news: Gambling Commission welcomes publication of Gambling Act Review Call for Evidence We license and regulate the people and businesses that provide gambling in Great Britain including the National Lottery. In the UK any and all winnings from gambling – either online or at betting shops – are entirely tax free and do not need to be declared as part of any tax return. This has been the case since the then Chancellor of the Exchequer Gordon Brown’s budget of 2001, when he abolished Betting Duty which had stood at 6.75%.
Whether you play poker, bet on sports, casino or bingo, Do I have to declare gambling winnings? And do you pay tax on gambling winnings UK? Are one of the most asked questions by UK players. Understandably you want to know if your HMRC is going to be taking a chunk of your hard earned casino, poker or sports bet winnings. Players are not required to pay taxes on winnings from online or land based casinos in the United Kingdom. UK gambling tax applies to casino operators, who are required to pay 2.5-40% of their gross gaming revenue. The United Kingdom has a wide variety of casinos, with around 24 in London, 13 in Scotland and 5 in Wales.
Do you have to pay tax on your gambling winnings?
UK Gambling Taxes
- All winnings either online or offline are tax free!
- Any betting tax abolished in 2001 by Gordon Brown.
- Tax used to be on bookies but they passed to punters.
- Bookmakers must now pay 15% POI tax but not punters.
- POI tax on any games of chance increased from 15% to 21% but again not for punters.
In the UK any and all winnings from gambling – either online or at betting shops – are entirely tax free and do not need to be declared as part of any tax return.
This has been the case since the then Chancellor of the Exchequer Gordon Brown’s budget of 2001, when he abolished Betting Duty which had stood at 6.75%. That duty was removed in an attempt to persuade bookmakers not to move their operations overseas and therefore take jobs and revenue away from the UK economy.
All of that is not to say that there is no tax involved when it comes to gambling in the UK, however, and there is a ‘point of consumption’ tax related to the activity. This does not affect punters themselves, though, and will be dealt with separately further down this page.
Will the situation ever change? Generally speaking there is little chance that this situation will be reversed, either, as the UK tax system is simply not built in such a way that taxing gambling winnings would be viable. This is the case as it is fairly standard within the system that if tax is levied on the income or profit made through an activity, then there must also be an allowance made against losses through the same activity.
With gambling being an activity where overall more losses are made by punters than winnings, therefore, such a change in the tax legislation would cost the UK government revenue. As a result, it is quite simply not something which would be considered. Your betting, casino, slot machine, poker and bingo winnings are yours to keep tax free.
What About Professional Gamblers?
It may seem logical that the tax situation would be different for professional gamblers than it is for occasional punters. When it comes to pure winnings from betting, however, that quite simply is not the case. As we have discussed above these winnings are not taxable and this remains true even for a ‘professional gambler’. That is because HMRC do not recognise professional gambling as a taxable trade.
In fact, within their most up to date ‘Business Income Manual’, HMRC clearly define their position on professional gambling:
‘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.’ BIM22017
Gambling winnings, therefore, remain free of tax regardless of whether they make up an individual’s main source of income. Where the situation can get a little more complicated, however, is in the case of income related to gambling but not actually direct winnings from gambling. Appearance fees paid to poker players for playing at certain tournaments, for instance, represent payment for a service provided to the tournament organisers and as such may be taxable.
Away from the UK, too, tax laws and legislation do differ and it would benefit a professional gambler outside of the UK to research the specific rules and regulations within their own country.
UK Point of Consumption Tax
As we mentioned earlier, Betting Duty for gamblers was abolished in 2001 and was at that time replaced by a 15% tax on gross profits for bookmakers and gambling providers. That tax was initially charged on a ‘point of supply’ basis, meaning that if the bookmaker or company were not based in the UK, then they were not liable. This situation has more recently changed, however.
From the latter part of 2014, the tax on bookmakers’ profits was changed to a ‘point of consumption’ tax by a combination of the Gambling (Licensing and Advertising) Act 2014 and by the introduction of ‘Remote Gaming Duty’. This means that regardless of where they themselves are based, providers must pay a 15% duty on any bets placed by UK customers.
In the 2018 budget chancellor George Osborne announced that the point of consumption tax would rise from 15% up to 21% for all games of chance but sports betting would remain at 15%, for now.
Gambling Taxes In The Rest Of The World
|France||2% on poker cash pots, 7.5% on sports (+1.8% levy) and 7.5% on horse racing (+8% levy)|
|Greece||No except lottery at 10%|
|Ireland||Bookies pay 1% on all bets – not winnings.|
|Kenya||No – bookies must pay 7.5% on their winnings.|
|Netherlands||No expect lottery at 29% above €454|
|Portugal||No expect lottery at up to 35%|
|Romania||1% up to 66,750 RON, additional 16% of surpassing margin up to 445,000, additional 25% of surpassing margin over 445,000 RON|
|Slovenia||No expect lottery at 50% if more than €4,000|
|Spain||No but must declare winnings as income for taxation|
|South Africa||No except 6% on horse racing.|
As the above table shows, where various types of gambling are legal there are a variety of different attitudes towards taxation on winnings from those forms of betting. If your country is not listed then it’s likely gambling is not strictly legal and there is therefore no taxation laws.
British bookmakers are expecting a brisk trade on Saturday as punters enjoy tax-free betting for the first time in 35 years.
The scrapping of a 9% government tax on all bets, which came into effect at midnight on Friday, will be replaced by a 15% tax on bookmakers' gross profits.
Bookies around the country have welcomed the move, predicting it will bring a boom to the number of bets being placed in the UK.
It is the greatest day for punters since betting shops opened on May 1, 1961
In recent years, many UK bookmakers had moved their businesses offshore, to enable their customers to enjoy tax-free gambling by betting by phone or online.
Channel 4's betting guru John McCririck has hailed the move by the Treasury as a 'new dawn', and many experts predict turnover to spiral.
'It is the greatest day for punters since betting shops opened on 1 May, 1961,' said McCririck.
'It is now a paradise for punters. The most competitive prices ever on the racecourse and now betting's tax free - what more could punters want?'
Bookmakers Hills, one of the businesses to move offshore, has announced it will move its operations back to the UK.
David Hood, Hills' public relations manager, said: 'There is no doubt that punters are sitting up and paying attention to the opportunity before them.
'Serious punters have been betting at zero deductions via the internet or telephone to off-shore bookmakers for some time and that business is now back in the UK with the repatriation of our international operations.'
A flurry of bets are expected for England's big match on Saturday
The tax change comes in time for England's vital World Cup qualifier against Greece on Saturday, which is expected to spark a flurry of betting activity.
'Biggest Grand National ever'
Bookmaker Ladbrokes estimates that annual turnover could rise by 30%, from its current level of £7.3bn.
The company is already predicting that next April's Grand National will be the biggest yet, breaking the £100m turnover barrier, compared with £70m last year.
Chief executive Chris Bell said: 'It could benefit Britain's punters to the tune of £800m over the next year - that's equivalent to £300 for each of Britain's 2.7m regular betting customers.'
Uk Gambling Tax Free Countries
Ladbrokes is spending £40m to build 40 new city-centre betting shops, employing 1,000 staff.
Uk Gambling Winnings Tax Free
Betting duty was introduced just before England's World Cup victory in 1966.
Chancellor Gordon Brown announced the move to scrap it in his March budget to stop the boom in off-shore tax-free gambling, which costs the exchequer millions of pounds each year.
Uk Gambling Tax Free States
As the system stood, the government collected betting duty of 6.75% from bookmakers, which was passed on to punters through a 9% tax.