Gambling and Betting Tax Laws in the UK - the Effects on Players

Every country has its own specific laws related to taxing gambling-related activities and the UK is no different. In this blog post, we’ll explore the historical background to taxing gambling activities in the UK, talk about the industry’s contribution to the Treasury, look at current and forthcoming legislation, as well as answer the question of whether or not you, as a player, are liable to pay taxes on your winnings made from gambling activities. So, stay with us to find out more on your rights and responsibilities related to gambling taxation in the UK.
Parliament of Britain Share on Pinterest

Background and History of Gambling in the UK

Although rife throughout the UK, gambling and betting in their earliest forms were not taxed in the UK for a relatively long period of time. As a result of this and the fact that gambling was causing serious legal and moral problems, the Victorian government decided to issue the Gaming Act of 1845, according to which a wager was made unenforceable by law and as a result, all contracts between bettors and bookies became invalid, which meant that gambling in all its forms became an illicit activity which continued although without regulation or supervision.

This situation changed towards the end of the 19th century when gambling was finally allowed. However, this was only legal if gambling was regulated by the government-run Totalisator Board (the Tote) at selected tracks and courses. This institution could set odds and re-channel profits back into the Treasury. Later on came the legalisation of the Football Pools, which was another betting phenomenon. This emerged as an exception and they were “classed as a low wager competition” and were legally allowed to exist. Fast-forwarding to the 1950s, black market betting continued unabated and the government “had neither the resources nor the motivation to stop it.” As a result, the government licensed off-site betting shops under the Betting and Gaming Act of 1960 and the betting levy at the same time that remained in place until 2001. Since the Tote limited gaming to race courses and greyhound tracks It was illegal to take bets off-site unless these were made by post or over the phone. With the new Act of 1961 followed the opening of the first betting shops in 1961. There was a condition attached to this which said that bookmakers were to be charged a new levy of 6.75%. Bookmakers then “passed this on to punters in the form of a 9% betting tax.” Regarding paying this tax, it could either be paid at the time of placing the bet or on the winnings. Most elected to pay at the time of placing their bets, as a 9% tax on winnings could be relatively hefty indeed.

Government Revenue from Taxing Gambling

United Kingdom Gambling Commission

According to sources, betting and gaming tax receipts in the UK has nearly doubled over the past decade, rising to £2.7 million in 2017. This figure doesn’t distinguish between in-person and on-premise bets.

A 2017 report from the UK Gambling Commission indicated that remote gambling was the largest sector within the UK gambling industry, accounting for 34% of the overall market, with a “gross gambling yield for the year standing at £4.7 billion, with slot games making up a majority of this figure at £2.6 billion.”

With 15% being the taxable rate, 15% on £4.7 billion amounts to £705 million for 2017, going into the Treasury. This figure is only expected to rise with an increasing number of companies offering more services and more players joining the fold. Meanwhile, other sources indicate that in the 2016/2017 fiscal year, Her Majesty’s Revenue and Customs collected £2.7 billion in gaming-related duty. This figure includes lotteries, betting, live, and remote gambling, as the government does tax betting shops. Poker rooms, casinos, and other related establishments on their profits. Players don’t pay these fees directly, as they are built into the odds. The industry employs over 100,000 people.

What is the Current Legislation in UK?

At the roll of the new millennium in 2000, several changes were taking place in the UK’s gambling industry. Gambling was increasingly moving towards telephone betting and betting online, which allowed companies to move offshore to tax havens such as Gibraltar, Malta, and the Cayman Islands, allowing punters to bet tax-free. As a result, then Chancellor Gordon Brown legislated a change to the gambling tax law, establishing in 2001 a new taxing regime, abolishing betting duty. In that year the betting levy was abolished and was replaced by a 15% tax on bookmakers’ gross profits in the UK at a point of supply. Punters could now bet tax-free, although bookmakers are making their money back by providing games with lower odds and lower RTP (return to player).

In a 2014 amendment to the 2005 Gambling Act, through the Gambling (Licencing and Advertising Act) 2014, a new 15% point of a consumption tax would be charged on all gross profits which meant “offshore companies were obliged to pay tax on profits earned from UK customers to the UK Treasury.”

Failure to do so would mean failure to obtain or renew a UK gambling license. The amendment also meant the introduction of a ‘remote gaming duty’, which means that regardless of where they are based, providers must pay a 15% duty on any bets placed by UK customers.

Forthcoming Legislation Impacting the Online Gambling

The UK Chancellor, Philip Hammond, announced in his budget in 2018 that a higher rate of 21% point of consumption tax will now be imposed for online gambling on ‘games of chance’, up from 15%. This means if you play casino games, slots, table games like blackjack, poker, virtual, or any other fixed odds game of chance, there will now be a 6% higher tax on the profits made by the operators in the UK online casino list. The new tax will come into effect on 1 October 2019. Online players should expect to see lower RTPs and odds on their games as sites try to compensate for the higher taxes.

FAQ: Who is Liable to Pay Taxes and Other Related Matters

Here in this section, we cover the most frequently asked questions regarding taxation and gambling in the UK, namely, whether individuals are liable to pay taxes on their winnings, whether professional gamblers are required to pay tax, and finally, whether UK-based companies are exempt from paying tax to the national treasury. Stay with us to find out more. And if you are wondering where to play a bit, since we are after all a site that helps out players to find the right casino, you can see our list of the best online gambling sites UK.

Gambling at a Casino

Are Casino Winnings Taxable in the UK?

Despite the fact that casinos are liable to pay a 15% tax to the Treasury, you as a player, are not liable to pay tax on your winnings or deposits. Therefore, your gaming experience is essentially tax-free. However, you should keep in mind that casinos internally arrange it so that your RTP percentage is lower and this is how they end up taxing you indirectly so they can pay the Treasury.

Are Professional Gamblers Liable to Pay Tax in the UK?

In addition to the regular players, professional gamblers who earn a living from gambling are also not liable to pay taxes and this conversely means that they cannot claim tax refunds on their losses. In addition, since your winnings are not taxable, you do not need to declare them to the government.

Are UK-Based Companies Liable to Pay Tax?

The situation is different for UK-based companies, which are taxed on 15% of their profits, as mentioned previously. Lotteries are charged under the Lottery Duty at 12% of all stake money played. As for non-UK companies which offer betting and/or gaming services to people living in the UK, they need to register with Her Majesty’s Revenue and Customs and pay tax. They will be required to pay one or more of the following taxes: General Betting Duty, Pool Betting Duty, or Remote Gaming Duty.

Is Spread Betting Taxable in the UK?

Spread betting as an individual in the UK is also not taxable. You will also not be liable to pay stamp duties or commissions, apart from the spread. If spread betting is your sole source of income, however, you might be liable to pay tax. The best advice we can give here with regards to the spread betting being your sole source of income is that you seek independent advice from a tax expert.

Latest Articles

Are Loot Boxes Legal in the Netherlands

Published on: 31 January 2023

Casino Rama Resort

Published on: 28 January 2023

How Many Casinos in Ontario

Published on: 26 January 2023

View All Posts
Check Our Hottest Offers For February 2023
6x (500%) More Chips on 1st Purchase
Open Special Offers
6x (500%) More Chips on 1st Purchase
18+ Winstar Social Casino does not offer “real money gambling” or an opportunity to win real money or prizes. It is intended for an adult audience and entertainment purposes only. Due to this app’s authentic nature, all users are required to be 18 years or older to play. By downloading the app, you agree you are at least 18 years old and comply with all local laws pertaining to social gaming. Practice or success at social casino gambling does not imply future success at “real money gambling".