Gambling Tax in UK

Here at Alliance Leicester, one of the most common questions we get from our clients is about the gambling tax UK. Due to us having been in the business of tax throughout our company history, we have noticed an upsurge in the number of such queries corresponding with the rise of online gambling witnessed over the last 15 years or so.

There are often concerns, particularly after a big win or a run of good form, that the taxman will come knocking and take some of those earned funds away from them. However, as you will soon learn, the gambling tax UK laws are actually very much in the player’s favour so you don’t have to worry about this too much.

On this page, we aim to provide you with the knowledge you need about gambling taxation in the UK so you know where you stand and whether or not you should be contributing any of the money you win to the HMRC if you live in England, Scotland, Northern Ireland, or Wales.

Gambling Winnings Tax Laws

We imagine most people reading this are going to be players, so it is best to dive into the gambling tax UK laws that affect them. In regards to this, we have some very good news. This is because the gambling winnings tax laws actually do not require you to pay any tax on the money you have won. This means that when you scoop up a big win, you do not owe a single penny to the authorities. This is the same whether you play online or at a land-based casino.

There are a couple of reasons why there may have been confusion regarding this. Primarily, because this wasn’t always the case. Before 2001, players did need to pay tax on their winnings, but this was scrapped. Secondly, when it comes to the tax laws, people often get mixed up the US gambling taxation laws and the gambling tax UK laws. In the USA, players do still need to pay tax on their winnings and people who read this often assume UK players need to also.

Another reason why this could also be is that gambling winnings are similar in nature to earnings gained through investments – which fall under capital gains tax. However, gambling winnings are completely secular from this tax altogether. Thus, any money you win has been won fair, square and most importantly, tax-free. Naturally, this will be music to the ears of those who were concerned about the levels of gambling taxation in the UK.

Gambling Taxation at Casinos

This said, the gambling industry in the UK is worth millions so this naturally means that there is at least some gambling taxation going on. In regards to the gambling tax UK laws though, these mainly focus on the operators who provide the games to players.

Therefore, unless you operate a casino, you should be free from the obligation of paying gambling tax in the UK. These casinos and bookmakers who do offer gambling services foot the gambling taxation bill for the industry. This is fixed at a 15% tax on all profits that the firms earn from their ventures in the UK market and this is taken at the point of supply.

Most involved in the industry will be aware though that many operators are based outside of the UK and for a long time, they got away from obeying these laws. In the last 5 years though, this has changed. Since 2014, this same 15% gambling taxation was also imposed on any firms based outside of the UK too. This means that even off-shore casino companies aren’t exempt from the gambling tax UK laws.

When you look at the figures generated from taxes on casinos, it shows why gambling winnings tax laws for players don’t exist. The UK Government earn £4.7 billion from these taxes annually, owed to the fact that the UK make up 34% of the wider gambling market as a whole.

Gambling Tax UK Laws in the Future

In the last few years, the laws surrounding the gambling industry in the UK has changed a great deal. The governing body of the UK focused industry, the United Kingdom Gambling Commission (UKGC) has clamped down a lot on the laws focusing on the UK market. This has involved tighter restrictions on advertising and ways by which you can finance your account.

So far this has not affected any of the Gambling tax UK laws. However, it could be the case that at some point in the near future authorities may look toward upping these taxes – but there is no news of it yet. If there was something like this to happen, it would likely follow suit of the laws so far and be focused on the casinos and not the player.

Are Casino Bonuses Subject to Taxation?

Casino bonuses and all winnings attained through them are also completely tax free for the players. For example, when you get a casino deposit bonus by depositing funds into your account, you will have to go through the usual procedure to redeem the bonus itself. The required steps involve completing the specified wagering requirements before you can withdraw your winnings and bonus funds.

In this case as well, the onus of taxation falls solely on the shoulders of the gambling operators, be it casino, bingo, sportsbook and so forth. Good news, then, if you are wondering whether your casino bonuses are somehow limited in that sense! Fell free to go to your account, make a deposit and get your deposit bonus at your favourite casino.

Frequently Asked Questions

Is there a differentiation between casual and professional players?

No, under the gambling tax UK laws, all players are considered the same in terms of tax brackets – this is unlike the tax laws in the USA.

At what point would tax be required for players?

There is no point and it will always remain at 0%, as per the gambling winnings tax laws – unless that player decided to open a casino of their own.

Is there lower tax for offshore casinos?

No. All casinos have the same 15% tax that is imposed by the UK government. While this was previously different and off-shore casinos could avoid tax, but the laws were changed following the rise of these casinos and online casino gameplay.