Many often question what taxing obligations they will need to follow through on, should the event arise and you win a huge sum of money. The UK, it's one of the only locations around the world where taxes are not applied to any gambling winnings made. Tax HMRC gambling winnings are not a thing however, they do manage to cash in quite a bit from gambling operators instead, which does make sense really.
More people will wager their own cash and lose, then make a large sum of money. So effectively it is quite balanced out that way. The tax situation for Britain has made it increasingly a great location for gamblers around Europe that are professionals and to do this for a living, to try and live in the UK for a permanent residence. Read down below to find out more.
Do you pay tax on gambling winnings UK?
So, gambling from a player’s perspective is always free within the UK. However, in other hotspot locations around France, the USA, and Macau, you will need to pay up to 25% on any of the earnings that you ultimately make for yourself. That can definitely equate to quite a lot, especially if you are categorized into the higher band of tax percentage, based on your winnings!
Gordon Brown in 2001, was responsible for scrapping any gambling taxes for gamblers within the UK, meaning that professional gamblers can rest easy and enjoy the money that they earned through blood, sweat and tears. The Gambling Commission made by the Gambling Act of 2005 did, however, introduce stricter regulations to prevent any offshore threats, through the regulation of online casinos.
Nevertheless, the UK makes insane amounts of money from the gambling providers of the industry. Just in the fiscal years 2017-18 alone, there was a report of £3 billion made, just primarily from gambling service providers. The tax that providers need to pay at the moment is around 15%, which is a huge figure and really makes the last gaming-related duty years collated make complete sense.
Players will however pay their way in taxes through other means. The odds that casinos put in their systems, will take account of all the tax that is applied to each service provider, so if you look at it from a long-term perspective, you are contributing to the country's HMRC taxes. However, it is still better than completing all those self-employed tax forms that you need to complete every year, right?
Many gambling providers will try to get around the tax by basing their operations in regions where the taxes are smaller or they can have a tax-free jurisdiction together. Before the Gambling Act 2005 came into effect, many providers could get away without having to pay the 15%. Yet now, unfortunately, there is a license that needs to be bought, that regulates and identifies a casino's service within Britain i.e. if they target British customers. For that reason, the casino providers will then need to ensure they pay their taxes if they want their casino to be a legal facility of gambling within the UK.
If a site is not licensed, it does not legally have the permission to offer gambling services to any British players and can ultimately be held accountable to insane fines should those involved be reprimanded. For the players, it will always be better to play in regulated and licensed facilities, as the casinos will need to follow strict regulations on game fairness and security. So, effectively many casinos will ultimately lose business by not getting the license.
Make records of your income and wins
Getting into the habit of this is important for any gambler, as it will allow you to hold proof of your winnings, should any tax collectors, etc. come your way. If you're living a lavish lifestyle purely from your hand of luck, many would find this hard to believe and ultimately will raise eyes of concern. It is better to protect yourself from the get-go, to prevent any long-winded troubles that just make things difficult for you.
To summarise overall, it is best to take note that players will never need to pay any tax on their winnings, at any given time. However, if you build a business from their winnings and they are effectively in-taking profits, then that will be subject to tax obligations, of course. If you are a gambling or casino provider, you will need to pay a tax levy of 15% on whatever profits you make-offshore or not.
Finally, if you happen to be British but gamble in different regions of the world, you will be subject to the foreign tax obligations of that region, so do keep it all in mind!