Gambling tax in UK

Gambling tax in UK

Gambling tax in UK

Understanding Gambling Tax in the UK

The United Kingdom is among top 3 jurisdictions in the world that holds a flourishing gambling industry. Besides the fact that both land-based casinos and eGaming sites are stringently regulated and formally licensed here, the best part is that there is no tax on gambling winnings in the UK. You can fully enjoy your hard played cash, without having to share it with the government or any other authority. Instead of players, casino establishments or operators are levied certain taxes by The HM Revenue and Customs. The tax-free gambling system mostly signifies when you are gaming in the UK, whereas for tourists or international players, there may be particular taxes levied by respective governments of their jurisdiction for converting the cash into their own currency.     That being the long story short, read till the end to get more detailed information about the Gambling Tax in UK.

Is Gambling Tax-Free in the UK? What Tax Do Operators Pay?

As good as it sounds, really is gambling tax free in the UK? That’s not entirely true. Gambling is not duty-free; it’s just that there is no gambling winnings tax levied upon British players, for any kind of customs or duty. Whether they win a cent or a million, players get to keep the cash, entirety. While some casinos charge ‘withdrawal fees’ on their payouts, it’s not a government due.  In fact, if you are not a resident of GB, taking your winning cash back to your country and converting it into your currency is non-taxable by the UK government either, but it may be taxed as per the gambling laws of your own government. It’s recommended that you review the laws of your own country before you invest at a UK casino or any casino outside of your jurisdiction.

So What Is Taxed?

Gambling is one of the most substantial industries in Great Britain, and it’s uncanny for the UK Government to not levy any taxes on it. Instead of having punters to pay for it, online casinos and betting shops are charged a 15% Point of Consumption Tax or Point of Investment Tax, whichever sounds familiar to you. Online casino operators, as well as bookmakers, have to pay the government this percentage from their annual profit, and this is a one-time levy, that includes everything.

What If You Are a Professional Gambler?

The UK Government recognizes money plays as a way of entertainment and leisure activity, and there is no justifiable space for “professional gambling” in this jurisdiction. So no, even if playing for money is a source of income for you, that remains your personal choice, and your casino winnings will not be charged by the Government. As long as the player is not identified under any sort money laundering activity, it’s completely up to his/her advantage if they have devised any method to garner better success at their real-money venture, and whether they see it as a source of income. However, if your ventures get complicated, so does the law. For example, as long as you are the player, placing your own bets and having the payouts to your account, that’s good. But say, if your bets are paid by someone else, say a professional poker player, who is hired by another, then chances are for you to attract some sort of professional taxation.

The Traditional Codes of Betting and Gambling Laws of the UK

The first notable gambling law in the United Kingdom was perhaps, the 1892 Gaming Act, which was enforced by the Totalisator board, better known as the Tote that regularized race course and greyhound tracks betting. Though the regulation prohibited off-site bookmaking, this period saw a significant operation of black betting, highlighting the need for a more stringent regulatory enactment if the country was going to continue it’s gambling industry as a legal and liberalized one.   It was the 1960 Betting and Gaming Act that legalized gambling in Britain, outside of racing and tracks. And this allowed the presence of bingo halls at local clubs and fine dining restaurants across England. Then the Gaming Act 1968 liberalized the establishment with more commercial casinos and betting shops, taking games for money to the common people.   Bookmakers had to pay dues worth 6.75% to the government that they carried forward to punters with a 9% betting tax. The amount of money that bettors wagered with would cost 9% extra, while the winning payouts would be free.

Modern Gambling Tax Law of the UK

The gambling industry in the United Kingdom took some drastic steps forward into a more reformed and regulated significance by 2000. This period saw the initial success with online casino gaming, as sophisticated software providers like Microgaming, produced enticing new video slots that could be played for real money.     During this time, that because of the bookmakers’ levy, many UK-based casinos would migrate to other countries where betting was free. Thus, a big profit was taken out London, with the government being unable to do anything about it.   In 2001, the gambling levies on players were abolished, and instead, the new gambling law was enforced with a one-time, 15% tax on gross annual revenues to be paid by bookmakers alone. This helped the UK gambling economy to turn back to a better position than it was before, but still, casinos that were already engaged in their off-shore trading continued doing so legally and logically. The 2005 Gambling Act was finally issued in 2014, which structured the 15% point of consumption tax. This also included that offshore companies would have to pay the government a share of their profits when they receive customers from the UK. Licensing and regulation of online casinos were enformed stringently. Now casinos operating on the British Islands would require a license from the UK Gambling Commission.

FAQs about Gambling Taxes

  • Is there any tax on spread betting in the UK?

No, on a general scale. However, in cases, if you take this to a professional level or trade in the stock markets, then the forms of trading is likely to be liable to full gains levy of 18%. It’s recommended that you consult with a professional financer regarding this.

  • Is it necessary to declare your casino winnings?

You may not require doing so for normal winnings, however, if your wins exceed the amount that does attract a tax return, for owning that much of money, you can declare the winning for your own records keeping. You will not be charged for this declaration.  But the government will know how you got that profit, and your record will be clear.

  • Can I transfer my winnings to someone else?

It’s certainly possible, but that other person will be liable to an inheritance due in that case. The most convenient way is to cash out the money on your own, then use the money as you like. A maximum of £3, 000 a year, is non-taxable to give away, which you can give away with immediate installments of £250. If your demise occurs, within a period of 7 years, then the person you have gifted this, would be liable to pay for an inheritance tax.

  • Do I need to pay gambling tax in other countries?

If you are playing at off-shore casinos, then you have to follow the rules of that jurisdiction along with your own. So if in your jurisdiction your gambling winnings are non-taxable, and the off-shore casinos levy taxes, you’d have to pay them.

History of Gambling Taxes

Gambling has been a part of the British culture ever since the Victorian ages, or perhaps even before than that. However, the dues were not as finely regulated before. The Gaming Act of 1845, made wagerings legally unenforceable. But it wasn’t as fruitful either until, the Tote set out its regulation of the 1982 Gaming Act that eased up the scenario on a larger scale, finally recognizing playing for money as a legal form of entertainment in the UK and a lucrative economy as well.   During the mid-century, there have been sundry unkempt gambling activities, with a lot of black markets to operate prominently.   Things started to improvise from the time, that in the new millennium when the eGaming sector spread its wings, and the Government started to stringently regulate them for the better.

Gambling Taxes in the Rest of the World

Different jurisdictions have different laws and relatively different means of taxation on their gambling activities. Most prominent gambling destinations in the world for land-based casinos include Macau which charges a 40% tax on winning, while Las Vegas (USA) charges about 25%. Other countries that offer tax-free winnings are Australia, Canada, Sweden, and Germany. It’s highly recommended to review the winning dues when about to play at an online casino outside of your own country.

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