Do I Have To Pay Tax On Gambling Winnings?

Tax Free Green StickerMany people worry about the tax implications of that big winning bet, especially those for whom gambling is more than just a bit of fun, the lucky few who make a consistent profit from betting. Well, good news: when it comes to UK-based gamblers, there is no tax to pay on your winnings – even if you win a million pounds.

The position with tax has changed several times over the past 20 years or so but punters have been exempt from paying tax for a long time now, with the tax burden falling on the bookies and betting sites instead. The main reason for this is the argument that if tax was due on winnings it would be hard to argue against relief on losses and so the government decided it would be easier simply to tax the bookmakers on their profits.

Even professional gamblers, or those that use complex gambling systems to all-but guarantee a profit, are totally exempt from paying tax on their winning bets. All you need to do now is find some winners – and those profits are all yours!

Bookmaker Taxes & Duties

Taxes Tick Box

It wasn’t always this way, however, and the method by which betting is taxed in the UK has been changed a few times over the years. When betting shops were first legalised in the 60’s there was a tax known as betting duty which had to be paid on every bet – either on the stake itself, or on the winnings. This tax was a flat 9% for all punters.

Gordon Brown was responsible for abolishing betting duty in 2001 after betting started appearing online in an attempt to encourage punters to continue to bet in the UK rather than through an offshore bookmaker where there was no duty to pay.

The revenue lost by the treasury from the abolition of betting duty was countered by the introduction of a 15% tax on a bookmakers gross profits – effectively shifting the tax from the punter to the bookie.

In response, many bookmakers moved their online operations (or parts of them) overseas and took up residence in Gibraltar or Malta, both of which had licensing agreements with the UK which allowed companies based there to legally offer betting services to customers in the United Kingdom but didn’t have to pay the 15% levy on profits.

Point Of Consumption Tax

UK Map with Location Points Shown

This changed in 2014 when a new law was passed requiring all online gambling sites which accept UK custom to be licensed in the UK, regardless of where they were based. The new rules also saw the introduction of a 15% point of consumption tax for any wagers taking place in the UK, and levelled the playing field for UK and non-UK based operators.