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Betting & Gambling Tax in the UK – What do you have to pay, and when?


One of the few things that casino and sportsbook players seldom think of is if they must pay tax on their winnings.

After all, we’re so used to lotteries typically paying out winnings in tax-free cash; we often forget to think about slots and sports bets.

The question “do you pay tax on gambling winnings in the UK?” deserves a clear and proper answer. That is what we’re aiming to answer with this article.

We’ll look at betting tax in the UK, and if you need to pay gambling tax on UK winnings, either as a foreign visitor or citizen.

We’ll also look at what taxes the UK betting sites must pay, and if that affects you. If you’re eager to know the truth of the matter, let’s dig right in.

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A beginner’s guide to the UK betting tax laws

The UK gambling industry is a huge business. Many players love to have a punt, and gambling is a significant source of income for the government. In 2020, there are betting tax laws in England and the rest of the UK. However, will you end up paying anything to the government?

The Betting and Gambling Act (1960) was the first bill to legalise betting outlets and bingo halls. By 1968, casinos were legalised, too. All paid the usual levies on revenue, but so did the players. A whopping 9% winnings tax was applied on anything won. The Betting and Gaming Duties Act of 1981 did little to change that. It made things easier for high-street bookies to offer services, and effectively outlawed offshore businesses from advertising to UK players, but did nothing to alter the tax laws.

The first signs of change came in 2001, when then Chancellor of the Exchequer, Gordon Brown, announced the abolishment of the 9% levy. The tax on punters’ winnings was replaced by a 15% tax on bookies and casinos themselves. Brown did this as he feared that the UK Government was losing out to offshore casinos, who were providing their services to UK players without paying any duties at all. It is a move which has since been followed by most other major European nations.

Naturally, many companies shifted their business to Gibraltar, where a 1% levy was in place. However, a 2014 amendment to the 2005 Gambling Act (the one initiated by Brown in 2001), also stipulated that there would be a point of consumption tax on foreign gambling sites catering to UK players. The overriding rule change meant that any operator offering betting accounts to UK players had to pay the same 15% duty as their UK-based counterparts. Broken and defeated, they gave in.

The rest, as they say, is history. Where do the current laws leave you, though? Do gamblers pay tax in the UK, and what are the specific terms? Are gambling winnings taxable anywhere in the UK, or in just specific parts? It is time to look at the current gambling laws in place.

Gambling Commision Tax UK

The current UK betting tax laws

The current gambling laws stem from the same Gambling Act, albeit amended several times. The UK Gambling Commissionnow has full regulation over the industry, and one of the prerequisites for offering services to players in the UK is that licensed UK operators must have a UKGC license. This naturally means that they must adhere to the 15% levy on revenue, as well as a string of other regulations aimed at promoting responsible, safe, fair and secure gambling.

Anybody in the UK can gamble (via any means) provided they are the legal gambling age. The gambling age in the UK is set to 18 years old. However, does HMRC want you to pay tax on gambling winnings, and what are the current tax laws on betting in the UK?

To date, betting tax is abolished for all UK players. This means that you do not need to pay tax on anything you win. The UK Government does care if you win £1 or £100 million. It doesn’t matter if you win at football betting sites in the UK or pocket your prizes via a lottery. UK players do not pay tax on their gambling winnings to the tax authority, HMRC (Her Majesty’s Revenue and Customs).

How gambling tax in the UK currently works

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Ordinarily, no player will pay tax on gambling winnings in the UK. You may still be wondering “do I have to declare gambling winnings in the UK?” The answer is a resounding, no. You don’t even need to declare them.

For instance, if you were to engage in a spot of UK horse racing betting, and pocketed grand national winnings of £10,000, they are all yours. You can transfer them to your bank, and that’s the end of that. The same is true if you win big on lotteries, UK political betting, poker, bingo or any form of gambling game. You can engage in betting tax-free in the UK.

In theory, the tax you would typically pay is already paid when you bet. It is the responsibility of the sportsbook, casino or gambling entity to pay that tax on their revenue. There is nothing you need to do. If bookies choose not to pay their fair share of tax to HMRC, that isn’t your problem.

It is worth noting that if you’re an e-sports player and you land winnings, then it is a different story. If you play in e-sports tournaments and win less than £12,500 per tax year (overall), you do not need to pay tax. If you earn more than £12,500, you must pay tax. This is a flat 20% tax rate. Winnings between £50,001 and £150,000 are taxed at 40%. However, if you make money by betting on somebody else playing e-sports, your winnings are tax-free.

A variety of tax-free gambling options are available

As mentioned, virtually all forms of gambling income are tax-free in the UK. These include winnings from:

  • Slot games
  • Poker and card games
  • Video poker and instant win games
  • Bingo, keno, lottery and scratch cards
  • Prize draws and competitions
  • Live dealer casino games
  • Sports bets

Even if you engage in arbitrage betting in the UK, you don’t need to worry about tax. As for UK tax on cryptocurrency gambling, the rules are quite clear. You do not need to pay tax on anything you win when betting with cryptocurrencies. However, you are required to pay income tax on any money you make buying and selling digital currencies if that sum is over £12,500.

Betting Tax UK

Taxes on winning millions via UK lotteries

Do you get taxed on lottery winnings in the UK? You’ll be delighted to hear that the answer is no. You do not have to pay a tax when you purchase a lottery ticket, either online or in a land-based outlet. Is prize money taxable in the UK, then? No. Nothing you win or pay in relation to The National Lottery or Euro Millions is taxed in the UK.

However, we must point out that if you play foreign lotteries through online lottery sites, the rules may be different. For instance, if you were to play the Mega Millions or US Powerball online, and you won, you will most likely have to pay tax on your winnings in the US as American lotteries are seldom ever tax-free. In a sense, you’ve “made your money” over in the United States. Lotteries which are UK-based are always tax-free, though.

Betting Tax in the UK in relation to gambling companies and casinos

The biggest bookmakers – UK based are required to pay tax. So, too, are betting exchanges in the UK, casinos, bingo sites, poker rooms and all land-based outlets. The UK gambling tax rate varies based on what business is being offered, revenue, and a few other things.

Here is a rough breakdown of UK taxes for gambling enterprises:

Type of Game

Description

Bingo
Description
10% of profits during the accounting period, minus payouts. If winnings or stakes do not exceed £500 a day, £7,500 every 4-5 weeks, or are for charity, bingo operations are duty-free.
Casino Games
Description
Rates range from 1% to 50%. Companies must pay tax If they hold a UKGC license, or provide premises where gaming is offered. Unlicensed and unregistered companies pay the maximum 50% rate.
Lotteries
Description
Lotteries pay 12% of all stake money in the accounting period.
Machine Games
Description
Land-based games, such as FOBTs (fixed odds betting terminals) are free from duty if the prize is less than the cost of playing. In 2018, then Chancellor Phillip Hammond announced a new 21% tax on FOBTs. However, that tax is only the maximum cap. The actual amount of tax paid depends on the “category” of game. Those in pubs and clubs, typically have smaller stakes and prizes (Category C), than Category B2 (racetracks, casinos, betting shops), and Category B3 (gaming halls, bingo halls), so there is some leeway there.

The UK and spread betting taxes

You might think that things would work a little different with spread betting in the UK. After all, spread betting does not offer fixed odds, as such. Instead, punters are wagering on outcomes, and it is arguably a more dangerous way to bet. Here’s how it works:

A cricket betting UK bookmaker offers you a spread bet which states that England will beat Australia and score between 350 and 360 runs. You believe it will be 400 runs.

 You “buy” the spread bet for £1 (at 360 runs). If England scores more, you will get £1 (your stake) for however many runs England accumulate over 360. However, you will lose £1 for every run under 360.

Alternatively, you could “sell” the spread, which works the same way but in reverse. You’ll make your stake (in this case £1) for every run under the spread and lose your stake for every run over 360.

As you can see, there is a lot of risks involved with spread bets, but you can make a lot of top money doing it. Fortunately (if you like that sort of thing), there is no capital gains tax on spread betting, as with other gambling games.

The deal for professional gamblers

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Believe it nor not, some people make all their money from gambling. For them, it is an occupation. Surely, they pay income tax as gambling is their job, right? Wrong. There is no professional gambler tax in the UK, and despite it being their “job”, professional gamblers are not subject to income tax on their winnings. Naturally, this makes regularly match betting in the UK an attractive prospect.

There is an exception made for e-sports gameplay, but not e-sports betting. Playing e-sports can see you taxed on winnings over £12,500 from tournaments. However, using CSGO betting sites in the UK to wager online will see you net any winnings tax-free.

How does this compare to other countries?

Further Information

Betting companies in the UK aren’t the only ones who pay tax. Almost all major countries demand that operators cough up the goods in duties on their revenue. Are their countries like the UK which offer gambling winnings at a tax-free rate, though? Yes, and they include the following, where you can place Germany bets – no commission charged.

  • Austria
  • Australia
  • Belgium
  • Bulgaria
  • Canada
  • Czechia
  • Denmark
  • Finland
  • Germany
  • Hungary
  • Italy
  • Luxembourg
  • Malta
  • Romania
  • and Sweden

Your gambling tax UK questions answered – Our FAQ on UK betting taxes

If you have questions remaining, we’ll try to answer them in our easy to read FAQ guide. Let’s begin…

Casino software developers (the producers of slots and games) get taxed on any income they make, like other businesses. They also must pay for gambling licenses in some cases. However, they don’t have to pay taxes on revenue from stakes, like operators.

No. The UK doesn’t differentiate between games of skill and games chance.

It doesn’t matter whether you play with the best betting app in the UK or a terrible one. There are no taxes on mobile winnings.

Again, that depends on where you reside. Some countries (like those listed above) don’t tax winnings from gambling. Others have small tax-rates, and some will whack you with massive tax rates. It varies, so you need to look these up for where you reside.

No. Claiming no deposit betting UK bonuses and free bets or participating in any betting offers in the UK won’t see you charged a tax.

It doesn’t matter if you win £1 or £100 million. You won’t pay taxes in the UK no matter how much you win. The only exception is if you’re an e-sports player who engages in tournaments and wins. Then there is a tax on winnings over £12,500 per year.

This gambling tax law has been decided by the UK Parliament. It is a law which covers Scotland, too.

Taxes on savings is a different matter. There are separate tax rules for savings. Once you put money into your savings account, you are subject to the tax rules on savings. It doesn’t matter whether this money came from gambling or other avenues.

Again, the rules regarding gambling tax were decided by the UK Parliament. This means that it covers the entire United Kingdom. Each part of the country does not have its own gambling tax law.

I’m only visiting the UK, so do I have to pay any gambling tax if I win?

No, at least not in the UK. If you live in one of the several countries listed above, you don’t need to pay tax. However, if you live elsewhere in another country, you will need to check the gambling tax laws of your country.

Are gambling winnings going to be taxed in the future?

For the time being, the United Kingdom is focused more on promoting responsible gaming, than altering tax laws. The current tax laws seem to work fine, and most operators are content with it.

There was talk of operators leaving the UK market over Brexit, but that is folly. UK punters love to gamble. No operators will risk leaving one of the most valuable gambling markets in the world. The UK Government wants revenue from gambling and needs UK punters to bet, so they aren’t likely to alter the tax laws.

However, work is afoot with the UK Gambling Commission to ensure that operators provide safe, safe and secure, responsible gaming policies. This is an ongoing process.

The final word on betting tax in the UK

So now you know the score. The UK gambling tax laws are amongst the most flexible in the world. There is no betting in the UK (at least for players), and anything you win at online and land-based sites will not be subject to gambling tax in the UK.

This is no doubt music to your ears. As a player, all you need to do now is find top gambling sites to play at to get started. On this page, you will find a plethora of new UK bookmakers and recommended domains which offer you great opportunities to gamble online. Get started playing at top UK casinos and sportsbooks and who knows, you could pocket tax-free winnings today.

 

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