Gaming in many of its forms is perfectly legal in the UK through licensed operators. Stepping into a betting shop and placing a bet on a football game is practically a sport in itself in the UK.
The ‘UK Betting and Gaming Statistics’ release presents statistics from the 7 different gambling regimes administered by HM Revenue and Customs (HMRC):Bingo Duty. 1961 to 2001: 9% Tax on Stake or Winnings The tax-free status of gambling in the UK has not always been in place, however, and until relatively recently punters did have to pay tax on their bets/winnings. Betting shops were legalised in the UK in the 1960s and from then until 2001 there was a 9% tax levied against bettors. Government income from online betting, rose from £817 million in 2009 to £4.5 billion in 2017, says The Guardian. Today, online betting represents more than one-third of the UK’s gambling industry. Ireland to double gambling tax. Gambling tax in Ireland is set to double from one to two percent for both online and retail bets. Hike in UK online gambling tax imminent News on 22 Oct 2018 According to a Financial Times report over the weekend, Philip Hammond, the UK Chancellor of the Exchequer, is preparing to announce an increase in remote gaming duty on operators in his budget presentation later this month.
People play the lottery, head down to the local bingo centre, have a spin on the fruit machines at the pub, and place plenty of online bets through sophisticated and fun apps and websites.
Of course, with such a large gaming industry, the government is sure to get a piece of that sweet, sweet gaming pie. The UK taxes companies that offer online gambling services to people living in the UK, whether the company is located in the UK or not.
Let’s take a look at what they are taxing and how much they’re gaining from this lucrative trade.
Taxation of online gambling for UK-based companies
Taxation of online gambling in the UK by UK-based companies can fall under a number of different duty categories. While you might think that online bingo would be covered under Bingo Duty, it’s actually classified as Remote Gaming Duty and taxed at 15% of profits. The same goes for online casino gaming, like the casinos over at BossCasino. Lotteries are charged under Lottery Duty, at 12% of all stake money played and payable within the accounting period.
Taxation of online gambling for offshore companies offering betting in the UK
Under UK law, non-UK companies offering betting and/or gaming services to people living in the UK need to register with HM Revenue and Customs, as well as pay tax. There are a few exemptions.
For these offshore companies, they will be required to pay one or more of the following taxes: General Betting Duty, Pool Betting Duty, or Remote Gaming Duty.
General Betting Duty is derived from the profits from general or pool bets that are made by UK customers on horse or dog racing, or bets placed through an offshore betting exchange. The rates for GBD are:
- 15% for fixed odds and totalisator bets
- 3% for financial spread bets
- 10% for all other spread bets
- 15% of the commission charges charged by betting exchanges to users who are UK people
(source)
Online Gambling Tax Uk Rules
Pool Betting Duty is derived from profits made on bets that are not fixed odds and not to do with horse or dog racing. This type of tax is charged at 15% of profits.
Remote Gaming Duty is paid by operators for remote gaming profits on bets and games by UK customers, including casino games, freeplays and bingo. Remote Gaming Duty is also 15%.
Do gamblers have to pay tax on their winnings in the UK too?
Under UK laws, there is no taxation on any winnings from betting – meaning if you place an online gambling bet and win a fortune that you can keep every sweet penny of it and none of it has to go to the tax man. The previous taxation required on winnings was done away with way back in 2001. Some other countries and jurisdictions are far more strict. For instance, in Vegas, the rate is 30% for overseas visitors, and 25% for winning for citizens over $5000.
How much is the UK making from online gambling overall?
According to Statistica, betting and gaming tax receipts from the UK hit £2.7bn in 2017, over double the amount that it was just 10 years ago. While this figure doesn’t distinguish between in-person and on-premise bets compared to online gambling, this is a hefty figure.
In a report from the UK Gambling Commission in 2017, it says that remote gambling is the largest sector within the gambling industry, accounting for 34% of the overall market, with a gross gambling yield for the year standing at £4.7bn, with slot games making up a majority of this figure at £2.6bn.
If we take 15% of that original number of £4.7bn (15% being the taxable rate), we’ll see that it amounts to £705mn for the year. That’s a whole lot of money going back into the country’s coffers from remote gambling and the figure is only expected to climb with more and more companies offering services and more and more players getting in on the action.
When you think about it, 15% being fairly much the standard across the board for online gambling taxes in the UK isn’t really that much. Income tax rates for individuals in the UK are far higher, 20% and more, unless you’re earning under £11,850 per year, when it is 0%. £705mn only amounts to funding for one major infrastructure works project in the UK.
The taxation rates for online gambling in the UK are fair and the profits made by the government from this activity aren’t as staggering as you might have thought. However, it’s still an industry on the rise so we may as yet see this taxation profits heading up into the billions very, very soon.
Online Gambling Tax Uk 2019
Did you know that your gambling winnings in the UK are tax-free? You will never be taxed when you make a bet, nor will you ever have a proportion of your winnings taxed. There’s also no need to report your winnings; whenever you win a sports bet or a casino game, you get to keep 100% of the amount stated.
Instead of taxing the players, the UK government has decided to tax only the operators of UK online casinos. Not great news if you were planning to open a casino, but it’s fantastic for any gambler looking to play at one of the best online casinos in the UK.
Players will always pay a grand total of £0 for any kind of transaction. The operators, on the other hand, will need to pay the government 15% of their profits. This might seem like a high amount, but in comparison to many other countries, this is actually quite a reasonable rate. Nonetheless, some have resorted to using tax havens to house their operations.
Was gambling always tax-free?
It wasn’t always this way. In the past, players were required to pay a tax whenever they gambled.
Before the 1960s, gambling was illegal, so any betting operations were run on the black market. So of course, in those days, the government didn’t receive any tax whatsoever from the industry. So gambling was technically tax-free.
Eventually, gambling was legalised and legitimate betting shops opened. At this point in time, players would have a 9% tax levied against them. When placing their bets, players would be given a choice: you could either apply the tax to your initial stake, or you could apply it to your winnings. The choice was yours.
The tax on players shrunk over time. At its lowest, players were only taxed at a rate of 6.5%.
When was the tax abolished?
Eventually, the tax system was abolished completely and we were left with the tax-free system we still have today. According to CasinoGuide UK, this policy was implemented in 2002 by Gordon Brown. At the time, Brown was still the Chancellor of the Exchequer, although he would later go on to be the Prime Minister.
Brown removed the tax because he wanted the British gambling industry to remain competitive on an international level. With the rise of internet gambling, foreign gambling sites threatened to take away business from the UK. The move was certainly a good one; the UK remains at the forefront of gaming to this day.
What about professional gambling?
So if you make a living from gambling, surely you have to give the government a cut? Surprisingly, this actually isn’t the case.
Even if you pay for all your living expenses using only your gambling winnings, you don’t need to report anything to the government. You don’t need to pay any tax on your income either. The UK government doesn’t recognize gambling as a taxable trade; therefore, professional gamblers are also lucky enough to be exempt from the tax!
Is tax-free gambling here to stay?
At this point, it seems very unlikely a gambling tax on players will ever return to the UK shores. The tax was initially removed in order for the UK to remain competitive on the international stage.
Since 2002, more and more countries have gotten into the online gaming scene. As a result, the UK needs to stay competitive now more than ever.
On top of that, it would also be very difficult for the UK government to bring back the tax under their current taxation system. This is because the government would be required to give allowances to cover gambling losses. If the government is able to tax profit for an activity, they also need to provide allowances in the event that money is lost.
Not every country is the same
If you are someone who likes to make bets and visit casinos when you travel abroad, you should be aware that not every country is the same as the UK. In many countries – even ones in the EU – you are still required to pay a tax on your gaming. If you are traveling to a new country, make sure you always read up on the local laws and regulations.