Have you won a significant amount from gambling and don’t know how to pay tax for it? Well, taxes are only imposed on gambling winnings in specific countries, so you might not have to pay any tax.
For example, in the UK, there are no gambling taxes whatsoever. It doesn’t matter if you win £5 or £5,000, none of your winnings needs to be paid to inland revenue. This is a huge bonus to gamblers, as it means you retain 100% of what you win.
However, the same cannot be said for France, where players need to pay a 12% tax on winnings that are over €1,500. Gambling is also taxed in countries like the US, Macau, and Germany.
In this article, we’ll explain all you need to know about gambling and tax when betting in the UK.
Do I need to pay tax when gambling in the UK?
You don’t need to pay tax on any winnings from any form of gambling conducted in the UK. Regardless of whether you win money from sports betting or an online casino, you will not have to pay anything to inland revenue.
The reason for this is that there are so many offshore betting sites operating in tax havens. As Johanna Gullberg points out in this non-Gamstop article, many casinos operate from the likes of Panama, Malta, and Curaçao where the taxes are low. (source: https://techreport.com/news/non-gamstop-casinos) Not only does this benefit the companies, but also the players, because they don’t have to pay tax either.
These sites caused problems for online casinos that were UK-based in the 90s and early 00s. They struggled to maintain players as they couldn’t offer the same tax freedom that offshore sites could.
So, the UK government decided to abolish gambling tax in 2001. This encouraged some UK-based players to switch back to UK-based sites now that they no longer had to pay tax on their winnings.
Nearly 25 years later, the same rules apply. Even new forms of wagering like crypto gambling fall under the same rules.
Are professional gamblers taxed in the UK?
Even if gambling is your only source of income, you still don’t have to pay any taxes on your winnings. While this seems too good to be true, the reasoning behind the decision to extend tax freedom to professional gamblers makes a lot of sense.
If gambling winnings were to be taxed, it would mean that professional gamblers could technically claim back losses in the form of tax returns. This would make things extremely confusing for the customs and revenue as well as the gambler themselves. Instead, it’s much simpler to keep gambling tax-free in the UK.
How does the UK make money from the gambling industry?
The fact that players aren’t taxed begs the question: how does the UK make money from gambling? The gambling market is worth a value of £15.1 billion, making it one of the biggest in the UK.
Instead of taxing players, the UK government has made the decision to tax solely the gambling institutions that are UK-based.
The percentage taxed depends on the gambling institution, the type of gambling they provide, and how much money they make from gambling per year. Typical gaming duty starts at 15% but can increase to as much as 50%. Lottery duty, on the other hand, is set to 13% across the board.
From April 2023 to March 2024, gaming and betting receipts reached a total of £3,389 million. This was reportedly 3% higher than the government made from gambling in the previous financial year.
