Gambling Tax in the United Kingdom

UK Gambling Tax Explained

There are two main pieces of UK gambling tax legislation in place to ensure the safety of gamblers across the United Kingdom, these being: the 2005 Gambling Act, and the 2014 Gambling (Licensing and Advertising) Act. Overall, it’s the UK government that has responsibility for managing the laws surrounding the gambling industry in this country, with the UK Gambling Commission (UKGC) standing as the regulatory body. The UKGC functions as an independent organisation, ensuring an unbiased approach to monitoring and directing legislation along with managing regulation of the UK’s gambling operators.  

• The 2005 Gambling Act – this sets out the legal framework around ensuring individual safety, that no minors engage in gambling, that no criminal activity is attempted or enabled, and that, overall, gambling is undertaken in a transparent and fair way;
• The 2014 Gambling (Licensing and Advertising) Act – this act set out requirements operators based outside of the UK to hold UKGC licences, along with a particular focus on reforming gambling advertising. It also outlines rules stating that remote operators must pay gambling duty to the UK, and stipulates the necessity of a horserace betting levy to be paid by remote operators. 

Amidst all of this, there is some good news for gambling fans based in England, Scotland, Wales, and Northern Ireland: any winnings you gain through a UK-licensed gambling establishment is free from tax. The reason for this is that gambling isn’t recognised as a profession, meaning even professional gamblers, such as poker players, do not need to pay income tax on their winnings. In contrast, it is the operators, casinos, betting shops, and any other gambling establishment that are required by law to pay gambling duties to HMRC at a tax rate of 15% on all profits gained. So, if you’re a UK-based gambler, it’s encouraging to know that you have nothing to worry about with regards to UK gambling tax implications.

History of Gambling Tax Laws

Did you know that in 1541 a law called the Unlawful Games Act made nearly all gambling in Britain illegal because of a fear that betting interfered with military training? It’s a fun fact, but we don’t need to go this far back in time to see changes that have influenced how we currently manage gambling tax in the United Kingdom. 

Over the years, there have been many changes to UK gambling tax laws, and winnings haven’t always stood as tax-free income. Between 1961 and 2001, there was a 6.75% gambling levy placed on operators, who in turn shifted this into a 9% tax on either a player’s stake or final winnings, the choice of which being left to gamblers themselves.

Following this, 2001 saw the whole responsibility of tax being placed on the operators in the form of a 15% general betting duty on gambling supply, mitigating the likelihood of UK gamblers looking to place their bets offshore. The appeal of tax-free remote gambling, and the variation that online gambling had to offer, was no competition as far as UK players were concerned. However, this move was not a success, and the Gambling Act was amended in 2005 and again 2014 with the installation of gross profit tax replacing the previously favoured supply tax. 

Offshore Gambling Tax

Similar to any winnings gained from a UK-based gambling establishment, individuals do not need to pay remote gambling duty on any winnings from online gambling sites that are based abroad. As long as there is a legitimate registered licence in place, be that from the UKGC or perhaps a licence received via the Malta Gaming Authority, you’re good to go. The emphasis is still on the remote gambling operators and bookmakers to pay 15% to the tax office. Previously, remote gambling operators found it easy to avoid paying any UK gambling taxes when the local rates were in place, rather than anything focused on the UK tax rate. The 2005 laws changed this to ensure tax was calculated at the point of consumption, meaning if anyone accessed their site from the UK, a UK level of gambling tax needed to be paid. 

Keeping Records

Due to the lack of any legal requirement for gamblers in the UK to pay tax, there is equally no legislative requirement for records to be kept of winnings, gameplay, or anything to do with gambling activities. However, regardless of this approach to UK gambling tax, we always recommend that players keep track of their individual expenditure to ensure a healthy budget is maintained, and so there’s a barrier to the temptation to play just one more game, or put down one last wager to try and win back losses. If the figures are visibly written down, you’re less likely to go overboard. 

Nevertheless, it isn’t just for safe budgeting that we recommend keeping records up to date – you may find that a professional gambler, such as a poker player, uses the data for performance evaluation through recorded gambling losses, outgoings, rates of gameplay, and winnings. 

Other Taxes to Consider

While the immediate winnings aren’t hit with income tax for the individual, there are other potential taxes that may come in for your returns. There’s a long list of potential times in your life in which you’ll be required to pay tax outside standard income tax, such as inheritance tax. This will naturally only come into play when you inherit goods or money and, at the current rate, the requirement is to pay 40% on anything over £325,000. There are also taxes, such as Capital Gains Tax, that will require you to pay a percentage of the profit on any asset you’ve sold. Of course, this isn’t directly linked to gambling, however, if you are particularly successful and choose to invest your money in goods, be mindful that you will need to eventually pay duty on your winnings in some capacity. 

Gambling Tax in Other Countries

Due to the nature of tax on gambling, there is rarely a necessity for UK players to pay anything other than their usual United Kingdom-related taxes. However, for the sake of comparison, let’s take a look at some examples of player-based gambling tax in other countries.

Countries with no gambling tax on the individual:

• Australia
• Austria
• Belgium
• Canada
• Bulgaria
• Czech Republic
• Denmark
• Finland
• Germany
• Hungary
• Italy
• Luxembourg
• Malta
• Romania
• Sweden
• United Kingdom
  

Be mindful that gambling in other countries may require gambling tax to be paid, even if you are not a resident of that country. Here are just a few of the countries that legislate gambling tax on the individual:

• France – individuals are taxed at a level of 13.7% for any winnings over $1,500;
• Germany – a relatively new gambling tax of 5.3% has been placed on individual stakes;
• United States – there is variation in tax requirements but gambling winnings need to be declared in a tax return for income tax purposes;
• Spain – individual winnings over $2,500 on the lottery are taxed at 20% for the individual;
• Kenya –  African countries are increasingly taxing the individual as a way of dissuading participation. In Kenya, 20% tax is paid on any payouts achieved;
• Tanzania – between 10% and 12% is paid by the individual taxpayer on any gambling winnings;
• Romania – from January 2023 a higher gambling tax rate of 40% will be placed on all winnings. At present, it’s a staggered percentage, ranging from 1% for over RON 66,750 (€13,500), 16% up to RON 445,000 (€89,900), AND 25% for anything above this.