Let’s say you’re playing your favourite casino game — poker, blackjack, roulette — and you hit the jackpot. If you’re lucky enough to win big in an online casino, what happens next? Before you can enjoy your winnings, does the taxman get a look-in?
Here, we separate the facts from the myth and break down UK gambling tax laws so you’re prepared for that big win if it happens.
Do I have to pay tax on my online casino winnings?
The good news is: no! You do not need to pay tax on your gambling winnings in the UK.
This has been the case since 2001. Many bookmakers had threatened to take their business overseas due to the high rate of Betting Duty (6.75%), a fee chargeable on bets made in a licensed gambling operation.
As a result, the then-Chancellor of the Exchequer Gordon Brown scrapped General Betting Duty (GBD) in a bid to keep their operations within the UK. This means that gamblers in the UK do not have to pay tax at the point of consumption — that is, at the point in which they play in a casino or make a bet.
How is the UK gambling industry taxed?
When Gordon Brown abolished GBD, this was replaced by a new tax of 15% on gross profits made by casinos, bookmakers, and similar operations. At first, only UK-based gambling operators were liable for this tax.
This was known as a point of supply tax, as it only applied to operators who supplied their business within the UK. However, in 2014, the Gambling (Licensing and Advertising) Act 2014 was introduced, along with Remote Gaming Duty.
As a result, any gambling operation based overseas that still served gamblers based in the UK were liable to pay tax on their profits. This is known as a point of consumption tax, as it only applied to where games were being played.
These laws were partly introduced as a result of the increasing popularity of online casinos by operators based outside of the UK. These businesses were registered in countries with a low tax rate, helping them maximise their profit.
In 2018, the then-Chancellor of the Exchequer George Osborne raised gambling tax to 21%. This applied to all games of chance with the exemption of sports betting.
Do professional gamblers have to pay tax on their winnings?
But what about those individuals who gamble for a living? As it happens, the law applies to professional gamblers too, and they are exempt from paying tax on their winnings.
This is made clear in the HMRC’s official guidelines. In the Business Income Manual, it states: “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.”
However, this is not to say that professional gamblers are entirely free from paying tax. Any income that is related to gambling (outside of their usual winnings) are subject to UK tax laws.
For example, if a professional gambler was paid to appear at a tournament, they would be obliged to pay tax on that income. Although it has to be said, it’s still a small price to pay to be a professional gambler!
What are the gambling tax laws like in the rest of the world?
In the UK, you don’t have to pay tax on your online winnings. But what about the rest of the gambling world? Here are the countries that do tax your winnings:
Greece: only the lottery is taxed in Greece, to the tune of 10%.
Portugal: like Greece, only lottery winners are taxed here, although it’s at a rate of up to 35%.
Spain: all winnings must be declared as part of your usual income for tax purposes.
Romania: there’s a 1% tax on all winnings up to 66,750 Romanian Leu (RON). This rises to 16% when it surpasses up to 445,000 RON, increasing a further 25% when it surpasses over 445,000 RON.
Slovenia: lottery winners might have a bitter taste in their mouth in Slovenia after paying 50% in tax on all winnings over €4,000.
Ireland: punters are exempt, but all bookmakers in the Republic of Ireland are obliged to pay a 1% tax on bets, but not winnings.
Kenya: the East African country puts the pressure on bookmakers in its gambling laws, with a 7.5% tax on all winnings.
South Africa: unusually, the only gambling activity that attracts tax is horse racing in South Africa, to the tune of just 6%.
France: a relatively small 2% on poker wins and 7.5% on sports and horse racing (with a 1.8% and 8% levy, respectively).
Netherlands: only lottery winners have to pay tax on their winnings here. However, this only applies to wins over €454, which are taxed at a staggering 29%!
United States of America: there’s a flat rate of 25% on all winnings in the USA.
Planning a gambling trip abroad? It’s worth paying heed to each country’s tax laws before doing so!
It’s good news for the players: if you’re lucky enough to hit the big time, then you can be safe in the knowledge that you don’t need to pay tax on your winnings. But gambling laws are always subject to change — stay tuned to our blog for all the latest news and updates on UK gambling laws.