If you like to spend a few quid on the lottery or place a few bets every week, you may be wondering what the stance on tax deductions on your losses is in the UK.
Here’s everything you need to know.
In short, gambling winnings and losses aren’t taxable in the UK. So why is this?
One of the key reasons is that many people could claim back losses on their tax returns, just like a business would on equipment and other resources.
For HMRC, this would become a logistical nightmare and it would soon become extremely tiresome for gamblers to keep track and register every single bet they placed over the course of a year.
If you’re a professional gambler, the same no taxation principle still applies.
However, if a professional gambler is paid an appearance fee, they would have to declare this and pay tax on the fee.
According to HMRC’s Business Income Manual (BIM22015), “The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade”.
If you don’t have to pay the tax on winnings and are unable to offset your losses, who is responsible?
It’s in actual fact the casinos and bookmakers who have to pay the tax.
Although it’s worth noting that any winnings that exceed certain thresholds might still be subject to taxation. For example, any income earned through investments would be subject to an 18% capital gains tax deduction, while all your loved ones may have inheritance tax to think about on your winnings if you were to pass away.
A 40% inheritance tax deduction occurs if your winnings are £325,000 and above.
Daryl Charman is a Las Vegas expert, bringing his Sin City knowledge to our loyal readers. Whether you need to know if your Vegas wedding is legally bound, which country has banned gambling or how to cheat the casino industry, Daryl has a wealth of knowledge in the gaming industry.
Get personalised offers straight to your inbox and access our exclusive members' area!