If you’re the recipient of any kind of benefit, then you’re likely no stranger to having your income assessed.
This may be income from a part-time job, interest on savings or perhaps help from friends and family, all of which may cause your benefits to reduce if you go over a certain threshold.
The UK benefits system has a track record of making things complicated when it comes to assessing tax – something which they’re in the process of simplifying, with the introduction of the Universal Credit system back in 2013.
While employment and savings are all considerations for income, one thing that we may overlook is gambling winnings.
First of all, it’s important to understand that gambling winnings are not taxed. No matter what size they are, from winning on a scratch card to taking home all the numbers on the lottery, the amount you win will always be the amount that goes into your bank.
What is taxable, however, is interest.
This means that if you were to suddenly receive a large amount of money into your bank account one day, any interest you received on that money would be taxed – therefore, it’s not the original sum which is taxed, but any additional earnings you get from it.
So, how exactly does this apply when it comes to benefits? We can keep in mind the same principles for benefits as we can tax and additional income.
Certain factors can affect your entitlement to benefits, just like certain factors can affect whether or not your money is taxed, e.g. if it is income tax on wages or tax on your savings’ interest.
As the recipient of any benefit, you’re assessed based on your “capital”. That is to say, if you do have savings which one day go over a particular threshold, then you may lose your entitlement to some of your benefits as a result.
Your “capital” is any savings or assets you may have. Currently, if you receive housing benefit, you are not eligible to receive it if your capital exceeds £16,000.
While you won’t be entitled to any housing benefits with a capital of more than £16,000, you should also be cautious of anything over £6,000. Your benefits will be reduced if you do have a higher capital than this.
There are exceptions to this, of course – for example, if your partner has a Pension Credit Guarantee, then the £16,000 threshold doesn’t apply. Similarly, if you are a pensioner, then the £6,000 capital figure is increased to £10,000.
So, if you do find yourself “in the money” one day, then you’ll have to let your local authority know so that they can re-adjust your housing benefit accordingly. You must declare this to avoid being convicted of fraud.
While an occasional big win (that does not take you over a £6,000 capital) is unlikely to be highlighted with the Department for Work and Pensions, regular income could be a different story.
Indeed, you don’t have to declare your gambling winnings to the HMRC because they’re not taxed. However, the HMRC regularly share information with the Department for Work and Pensions (the department responsible for benefits) to prevent fraud.
This effectively means that you could be liable to produce bank statements if there is any suspicion of regular income that could be in violation of income support.
For example, if you take part in matched betting, where there is far more chance of a regular income (and far more propensity to lose money too – beware), then this may be assessed.
In this situation, it’s always best to be completely honest with whoever you’re claiming benefits from. It’s up to them ultimately whether they can class your earnings as capital or regular income.
For example, there have been cases of gamblers winning a significant sum, and the DWP categorising this into 12 monthly payments which could, therefore, be classed as regular income.
Not all benefits are the same, of course. Some benefits are means tested, which means that the DWP will assess your individual circumstances and look at your “capital” in order to make a decision on whether or not you are entitled to these benefits.
The current means-tested benefits are:
Income-based Jobseeker’s Allowance
Income-related Employment and Support Allowance
Tax Credits (Child Tax Credit and Working Tax Credit)
Council Tax Support
Social Fund (Sure Start Maternity Grant, Funeral Payment, Cold Weather Payments)
If you’re receiving non-means tested benefits, then it is far more likely that the DWP will take a lenient approach. However, the majority of non-means tested benefits concern those with disabilities, some of which could indeed affect our ability to gamble.
However, if you’re able to gamble lawfully and receive a non-means tested benefit, then this will have no effect.
Other non-means tested benefits include statutory benefits such as maternity or paternity leave – if you have time to make a big winning on a scratch card with a baby, then by all means, play away!
Benefit fraud is a very serious offence, but there’s no need to risk this by gambling irresponsibly and risking losing money you’re entitled to.
In most cases, the DWP will fairly treat anybody who is upfront and honest about any additional earnings they may make from gambling.
It’s also wise not to rely on gambling as a source of regular income. Firstly, a regular income affects benefits, and additionally, there’s no guarantee that one good month’s winnings will be repeated the next month.
As with all gambling, it is most advisable to approach it as a leisurely pursuit – just make sure you declare winnings of over £6,000 if you do win big.
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