Gambling Winnings & Tax Laws in the UK

By @500freeslots | May 29, 2024
Need To Know: Gambling Taxation in the United Kingdom

Every passionate gambler has experienced, at least once, the great thrill of winning big jackpots and taking the pile of bills into your hands after a victory. One bummer of winning big at a casino can be the gambling tax rate of the country you play in.

When it comes to gambling, tax-duty law may vary depending on the country, and some Governments are still considering throwing the dice and online slot-spinning to be illegal. Regardless if you are a pro gambler or just looking for some fun, the United Kingdom is the champion for betting sports and games since gambling is not only legal but the taxes on gambling winnings in the UK are non-existent, meaning you get to take the whole lump sum of the pounds you’ve won home with you. 

Some Governments have the tax policies that are directly putting their fingers into gamblers wallets, but somewhere along the way the UK found that it takes more effort to pull a taxation policy and the result isn't' profitable in terms of the national budget. So, throughout the country, when you are traveling through England, tasting the delicious food in Wales, walking down the cliffs of rocky Northern Ireland coast, or laughing at the Scotland stand-up comedy shows,  you can enjoy all the betting games you like, and leave the casino as a true winner, without a worry in a world.

Background of betting Duties in the United Kingdom

The story of an expert gambler tax wasn’t always as simple and clear a matter. It was only fifteen years ago that the UK Department for Culture, Media and Sport realized the obstacles and possibilities of the betting games industry from the perspective of the national budget. Thus, the newly founded Gambling Commission had to enforce the Gambling Act 2005, which has revolutionized the relevant laws and policies and improved the structures of child-protection within the gambling world.

The liability that the Government was facing, presented upon the HMRC, is that it is hard to track all the winners from online casino websites, make them claim the victory and the money received, and then apply taxes. Even so, the HMRC could suffer a big number of people approaching them with the invested money from the games they lost, trying to claim the money back. All things considered, the UK Government decided to go another way about it, and make gambling a non-taxable transaction (for the players).

The new policy the UK Government has implemented was to, instead of making all the players declare their winnings and risk them asking for their gambling losses back on the other side, make the casinos pay an extra 15% tax of their profit, in addition to the regular fee they already pay. So, the full explanation to the topic of how the tax is paid for the money won by the people is that the casino essentially pays this fee instead of you, and you get to keep all the luck you’ve had in the casino all night.

Brief History of Betting Duties in the UK

  • Not so long ago, the UK players were under the law that made them have to pay the taxes on all the money they win in a casino. However, those taxes were dissolved during the Gordon Brown mandate as the Chancellor of the Exchequer in 2001. After 2001, the tax regulations went a little blurry, since the players weren’t paying up anymore, but this industry wasn’t contributing to the national budget in any other way yet.
  • The Gambling Act in 2005 was the first document to describe the legal frame for all gambling activities in the UK. This legal paper has also set-up the legislation acts for emerging online gambling, which is the first paper of the sort dealing with online gambling. There are a lot of details regarding these regulations, however, they are the first of the kind, and a beginning of a new age for gambling on the world wide web.
  • The same year, a UK Gambling Authority has been established to monitor the gambling conditions making sure they are fair, prevent organized crime to operate from within the gambling establishments, and prevent children from gambling. A lot of the UK online casinos are following their recommendations on verifying the member profile and making sure there aren’t underage chilldren playing online.
  • Offshore casinos are now obligated to obtain a UK license and pay the taxes for all income the casino gets from the UK citizens, no matter where the casino physically takes place. So casinos from Tailand, Costa Rica, Singapore, San Marino, all fall into the UK regulations in order to invite British gamblers to their casino.

UK Inland Revenue: You do not pay tax on winnings on Slot Machines 

The road to reach that the taxes on slot machine winnings become 0% was a long and rocky one. If the policies were forcing each and every player to pay-up a percentage of the winning each time they’d hit a jackpot, the law structures would deal with situations like people not reporting gambling winnings or winning only small incomes (2-3 pounds) and paying a ridiculous amount of tax percentage. 

This complicated situation of implementing gambling winnings tax calculator becomes a nightmare once the opportunity opens-up for gamblers to claim gambling losses tax from the UK Inland Revenue - and we all know that gamblers lose a lot of cash until they win a significant sum of money. UK Inland Revenue is now operating under the law that is beneficial for both the budget of the United Kingdom and the players themselves - the country gets its vaults filled from the casinos directly, while the players go home with all the money they get, and nothing spoiling their happiness.

This new mechanism of taxing the casinos instead of gamblers has its downsides. Since the casinos are required to pay the taxes for all their income, regardless of whether the players win or lose, most casinos have simply started charging more to each player, so in the end, the players pay the taxes after all, and these are taxes for playing and not taxes on casino winnings as it used to be before the system has changed. Technically, you pay the winning taxes regardless of winning or losing, which is why it is a good idea to develop a promising statue and get yours money worth.

Who needs to declare winnings: casino or players?

Luckily for you, you don’t even need to be concerned with the gambling winnings tax rate. If you get lucky, you can win millions of pounds worth of jackpot without having to give a penny as the casino winnings tax.

Even though the casino fills in the gambling winnings tax form, it is a recommended practice that you still report the income to the HM Revenue & Customs (HMRC), to be on the safe side. You won’t need to pay any taxes since gambling ain’t considered a trade, but the tax service can put you under investigation because of all the new stuff you suddenly can afford out of the blue.

So, overall, no taxes should be paid, but the country still likes to know how you came about the extra cash and keep you on the white list with all the other professional (or lucky) gamblers.

Gambling as a profession: no need to send tax return?

Since tax on winnings UK are not a thing for gamblers, so long as gambling is a tax-free activity, you can make as much money you want with your gambling profession. So, if you have a winning strategy that enables you to live out of slots or poker, you can do it for as long as you’d like and not pay taxes on your paycheck. 

Nonetheless, professional gambler salary should be declared on your tax returns. This does not make your income taxable, but it does prove you have a steady income, thus that you are “self-employed” in the eyes of the law. From the legal perspective, this only takes all suspicion away from you when you are making big purchases such as buying a new Porcha.

Now, most of the professional gamblers have an accountant or someone who has been taking care of the finances the whole time. What you didn’t know and both you and your pocket is that if you play outside of the Great Britain, you may have to cope with the tax mechanisms of the foreign country.

Gambling taxes in Vegas

While you are in Vegas as a UK citizen, having a great time with gamblers from around the world in luxurious casinos, it is important to know a few things about their laws. In Las Vegas, you could be subject to a federal withholding tax, although you can often apply for a refund as a non-resident. To report the income tax games, you’d need to fill in the w2g form and declare your winnings. To find out what is w2g form and how to go about it, you’d have to refer to the IRS website for up-to-date information.

Offshore betting taxes for UK citizens

With faster internet, the casino industry is quickly progressing in the world wide web. The game quality and beautiful graphic designs are becoming more attractive to the gamblers, as well as the idea to be able to gamble with people from all over the globe.

Due to the lockdown in 2020, online gambling is the only choice for many passionate players in the UK, which is why it’s good to know a little something about tax regulations regarding the virtual casinos. First of all, we have to notice that many of the online casinos running in the UK are now based offshore. Even if most of those were originally established in England or Wales, they moved their houses to other countries with tax-free regulations to reduce their costs.

As a retribution to these events, the Gambling Commission in the UK has implemented a policy which requires for all the websites welcoming any UK-based citizen to be fully licensed regardless of where they are based geographically. Furthermore, they are obligated to pay-up the same amount - 15% for the tax on each bet made by the citizens of the UK.

From the perspective of the players, there is nothing to be concerned about gambling income and losses. You don’t have to move a finger to fill in any tax forms, but you are also not eligible for writing off gambling losses.

So, to sum up - no, you don’t need to send a tax return, however, it is desirable to do so. It can spare you a lot of trouble in the long run.

What if you`re gambling & not a resident of Great Britain?

For non-UK residents who are visiting the British coast during the summer holiday, different regulations appy. Essentially, you can gamble at as many casinos you want, win the big jakpots, and still not be a factor in paying taxes within the UK. However,  your country of residence might have different rules. Before you pack your bags and hit the trip full of adventures, do your research about the regulations of bringing in the casino winnings from a foreign country back home.

When arriving home, you must declare goods that are worth over a certain value, while upon leaving the UK to any non-EU country, you must declare any cash over 10k pounds. Even though you are not required to pay taxes for this money inside the UK, you are most likely obligated to pay the taxes upon entering the country - for the cash or the goods you buy during your visit to the United Kingdom.

To sum up

At this moment, you can walk into any UK casino to gamble and win as much money as you’d like, and you have no obligations to pay anything to the tax pickpockets. No matter how good this is for the people, if the UK legislation undergoes any changes in the future, it could affect all the UK gamblers. Even though only the casino companies are being charged with the taxes for this trade business, they are trying to make the bets higher in order to move the costs to the players either way. The negative effect this has for the people who enjoy gambling are also poorer odds for winning, and the smaller RTP rate.

These legislations also mean that the answers to the questions such as Can I deduct gambling losses? , How to claim gambling losses? , or Are gambling losses deductible? are: no you can not claim your losses. Since winning the casino money is a non-taxable trade, you are not eligible to get any tax-return either.

All in all, the rules are simple:

  • Not a single player in the UK has paid taxes upon winning in a casino since 2001.
  • The casinos are paying a mandatory 15% tax on top of their regular taxes for all their earnings.
  • These regulations apply to both casual and business players.
  • If you go outside the UK, odds are you will be requested to pay the tax fees in those countries.
  • The tax policy from 2005 applies to both live and online casinos.
  • Offshore online casinos are demanded to pay the same percentage of the tax for all the earnings they make from the UK gamblers.