Tax legislation, like the recent FTT case, says that gambling winnings are not currently taxed in the UK. Casinos and other betting sites pay taxes on their profits, and remote gaming operators pay a 15% duty. The basic principle is simple: overall, punters will lose more than they win, while “the house always wins.”
Do you pay tax on your winnings?
Gambling winnings are not subject to Income Tax or Capital Gains Tax. This is the case whether you receive them in one lump sum or as a series of payments.
You may, however, have to pay tax on gambling winnings if:
- You’re a professional gambler
- Gambling is your only or main source of income
- You have other sources of income, including from a job, and your gambling winnings take you over the Personal Allowance (the amount of money you can earn tax-free in a year)
If any of the above apply to you and you’re liable to pay tax on your gambling winnings, you must declare this to HMRC.
You can do this by:
- Register for Self Assessment
- Including your gambling winnings in your Self Assessment tax return
- Paying any tax you owe by the 31 January deadline
If you don’t usually send a Self Assessment tax return, you’ll need to register for one by 5 October following the tax year you had the gambling winnings.
For example, if you won the money in 2018-19, you’d need to register for Self Assessment and send your return by 31 January 2020.
Your job status affects how gambling winnings are taxed
If you’re an employee or worker, your employer will usually deduct Income Tax and National Insurance from your wages before they pay you.
If you’re self-employed, you’ll need to include your gambling winnings in your Self Assessment tax return and pay Income Tax on them.
You may also have to pay Class 2 and 4 National Insurance if your annual profits from gambling are more than £6,205.
If you’re a professional gambler, you’ll need to pay Class 2 and 4 National Insurance on your gambling profits.
What about Capital Gains Tax?
Gambling winnings aren’t subject to Capital Gains Tax. This is because they’re not considered to be capital assets.
You may have to pay Capital Gains Tax if you sell or dispose of other assets, such as property, shares or a second home, and make a profit (known as a ‘chargeable gain’).
If you receive regular payments from a pension or annuity, some of these may be taxable.
How to File For Gambling Tax Returns
If you’re an online gambler in the United Kingdom, the process for filing your gambling taxes is relatively simple. All you need to do is declare your winnings on your tax return. This can be done by registering for Self Assessment and including your gambling winnings in your tax return.
For more information on how to file a tax return, visit the gov.uk website here.
I hope this answers your question!