If you are new to sports betting, you might be wondering how your winnings will be taxed. The answer to this question depends on the online gambling legislation of the country you live in. If you are a UK citizen, stay with us to learn everything there is to know about the taxation of your sports betting winnings so that you can enjoy this form of entertainment to the fullest.
UK Gambling Taxes
When playing games of chance you do not always win and that is the fact. The good news is that when you do happen to win, your winnings will be tax-free. Whether you earn them while placing bets online or in physical betting shops, you will not be required to share your prize with the Government. This was not the case at the dawn of the 21st century, though.
UK punters had to pay tax on betting until 2001. However, Betting Duty which stood at 6.75% was abolished by Chancellor of the Exchequer Gordon Brown in 2001 which made all winnings entirely tax free in the UK. That means that you do not have to declare them to the authorities at all.
This was a measure which made bookmakers stay in the UK instead of moving their operations to other countries thus taking jobs and revenue away from the UK. As a player you can keep playing your favourite games of chance including sport betting without worries about paying taxes on your winnings as the situation will not change in the future. The logic is quite simple, as gambling results in more losses than winnings, and if players were made to pay taxes on the sums they won, it would probably result in them giving up on such activities.
Who Pays Taxes?
The taxation on gambling activities shifted from punters to bookmakers and online gaming operators since 2001. The sports betting operators are required to pay a 15% tax on their profits coming from organising games of chance online or offline. Initially, only bookmakers and gaming operators registered in the UK were liable to pay such a tax, but the policy was changed in 2014, when the profits coming from the UK players’ bets were charged regardless of the location of the game provider. This happened due to the Gambling (Licensing and Advertising) Act 2014 and the introduction of ‘Remote Gaming Duty’.
Should Professional Gamblers Pay Tax?
Her Majesty’s Revenue and Customs (HMRC) does not recognise professional gamblers as a separate category. They are treated the same way as regular or occasional players as they place their bets according to the same rules. To put it simply, the UK Government is not interested in the way punters place their bets or whether they are successful in it or not. So, even if you make a living from playing sports betting or maybe casino games, you will not be required or obliged to pay any kind of tax on your payouts, which is more or less the case with the rest of the world.