Beginner’s guide to UK gambling tax
A famous saying goes that there are only two things you can be sure of in life, and one of those is taxes. But that isn’t actually always true- at least not when it comes to online gambling winnings. This is music to the ears of casino players hoping to land that lucky windfall, but what are the reasons behind it? Read on to find out everything you need to know about gambling tax.
Is UK gambling tax-free?
You can put away the gambling tax calculator because UK gambling winnings are completely tax-free, for both online and offline betting. So for players in England, Scotland, Wales and Northern Ireland, any money you win on casino games like slots, roulette and blackjack is entirely yours to keep. The same also applies to players in the Republic of Ireland. As well as casino games, returns from sports betting, bingos and lotteries aren’t taxed.
It’s not just casual players that benefit from tax-free gambling, either. Gambling isn’t a recognised trade in the UK, which means that even professional gamblers needn’t pay tax on gambling winnings. However, gambling-related income, such as tournament appearance fees, may be subject to tax.
History of UK gambling tax
UK gambling hasn’t always tax free. Betting duty was in place until from 1961 to 2001, where gambling operators were charged a levy of 6.75% and this was passed on to punters as a 9% tax on gambling winnings. Bettors could choose whether to pay the betting tax on the stake or winnings, but understandably most chose to tax the stake.
In 2001, a 15% point of supply tax on bookmakers’ gross profit replaced the betting levy. This meant that gambling operators absorbed all betting tax responsibilities, leaving punters tax-free. One of the main motives behind the move was to prevent UK players choosing offshore sites in the midst of the increasing popularity of online gambling- something that has been a success, judging by the booming UK gambling industry.
However, this didn’t solve all problems. Bookmakers were taxed at the point of supply, which meant that they were taxed according to where they were based. So, while UK bookies were paying high taxes, offshore sites offering betting markets to UK punters were paying much less. This influenced many major UK bookies to move their online operations to low-tax locations, such as Gibraltar and the Isle of Man.
Of course, this meant the UK government was missing out on tax revenue, which lead to an amendment to the Gambling Act 2005 in 2014. The point of supply tax was replaced by a point of consumption tax on all gross profits, meaning that any site offering services to UK bettors would be liable to the 15% tax.
What about when I bank my winnings?
While your winnings won’t be taxed before the money enters your bank account, they may be subject to other taxes, such as Gift Tax and Inheritance Tax, later on. Gift Tax may apply if you’re ‘gifting’ a slice of your gambling winnings to someone, while Inheritance Tax would apply to your winnings if you left them as part of your estate. Any interest you earn from your gambling winnings may also be taxed as income.
How much are UK gambling companies taxed?
While UK online casino players get off tax-free, UK gambling operators aren’t so fortunate. Online casinos and bingos pay a point of income tax under Remote Gaming Duty. The rate is currently 15% of profits, though this is set to increase to 21% from 1 October 2019.
Land-based UK casinos are taxed depending on how much they earn. Rates can range from 15%-50% of profits from games like poker, roulette and blackjack, while the tax for land-based slots ranges from 5%-25%.
Sports betting is also taxed at 15% but, unlike other gambling tax rates, is not set to increase in 2019. Lottery operators are taxed under Lottery Duty, meaning they’ll pay 12% of all stake money paid and any money payable within the accounting period.
Is gambling tax-free in other countries?
Many countries in Europe, as well as Australia and Canada, do not put a tax on gambling winnings. Some countries do tax certain forms of gambling, though, so it’s always advisable to read up on your country’s tax laws. For example, German gamblers won’t have to pay tax on winnings, but the 5% tax on sports betting stakes can be passed on to punters. US gamblers are taxed under federal law, and most states also impose a state betting tax, which varies between states.
While gambling in the UK is tax-free, if you gamble abroad then your winnings may be subject to the tax laws of that country. So if you do plan on playing at overseas casinos, whether online or offline, we’d advise doing your research so that you know whether you’re returns are liable to any tax.
All clued in?
So there it is— whether you’re a fan of slots, table games or live dealer casinos, UK players can enjoy gambling online completely tax-free. Hopefully you’ll get lucky and pocket some returns- good luck!
UK Gambling tax key points
- Gambling is completely tax-free for UK players, including professional gamblers
- The previous 9% betting duty was stopped in 2001
- Gambling operators pay a 15% tax on profits
- The tax for remote casinos is to increase to 21% in October 2019
- If you gamble overseas you may be taxed according to foreign tax laws
Do I have to declare my winnings from online casino games?
No. As any money you win from casino games or other forms of online gambling is tax-free you don’t need to declare it when filling out your tax return.
Do gambling operators pass charges on to customers?
While UK punters don’t pay any tax on gambling winnings, operators may pass charges on in other ways, such as lower odds, payouts and high wagering requirements. Of course, the competitiveness of the industry means the operators absorb some of the costs, but there’s a chance punters could be indirectly affected by the increasing operator tax in 2019.
Are casino software developers taxed?
This depends on whether they’re based in the UK or not. If they are, then they will be taxed like any other UK company, but many developers choose to base themselves in countries with lower tax rates. Microgaming, for example, is based in the Isle of Man, a major egaming hub with lower taxes than the UK.
Do tourists and visitors pay tax on gambling winnings in the UK?
No. If you’re visiting the UK and fancy a flutter on the likes of slots or roulette you won’t be taxed by the UK, either online or at land-based casinos. However, your gambling winnings may be subject to the betting tax laws of your own country once you leave the UK.
If my country taxes gambling winnings, how can I work out how much I’ll be taxed?
If you live in a country which has a betting tax on punters then your best bet is using an online gambling tax calculator. You’ll also want to check whether your gambling losses are deductible, which means that you’d only pay tax on any profit that’s left once you deduct your losses from your winnings. In the US, for example, gambling losses are not deductible in states like West Virginia, but are in others such as Nevada.
How can I withdraw my winnings?
The best UK casinos offer a range of banking options for deposits and withdrawals. The most popular are debit and credit cards, but most sites accept a range of other payment methods including e-wallets like PayPal. You can check out our expert casino reviews to check out which banking options are available at different casinos, as well as withdrawal limits and processing times.
Will the gambling tax laws change?
It seems very unlikely for the foreseeable future. The UK already makes a huge amount by taxing operators, with the gambling industry taking over £14 bn from 2017-2018. Bringing back a betting tax for players could have a negative effect on the sector and its profits. Of course, no one can say for sure what will happen in the long run, but there has been no indication so far that a tax on bettors will be introduced for the meantime.
Alan is a staff writer at TopRatedCasinos.co.uk. He covers all areas of the online casino industry, from the newest slot releases to the latest live dealer technology. Alan is also a fan of sports betting, and spends most of his spare time watching and reading about football.