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Author Topic: If primary source of income, are gambling winnings taxable in UK?  (Read 3096 times)
cambridgealex
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« on: September 25, 2018, 12:36:47 PM »

Revisiting an old issue here, but can anyone find me any Government literature that confirms that gambling earnings in the UK aren't taxable, even if it your primary income? Just had Dad on the phone who's met a lawyer & ex accountant who assured him that if it's your primary income then you DO have to pay tax on it.

I need something official to prove him otherwise. Thanks.

Even if you could easily evade- morally, should we be paying taxes?
« Last Edit: September 25, 2018, 12:47:34 PM by cambridgealex » Logged

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StuartHopkin
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« Reply #1 on: September 25, 2018, 01:52:28 PM »

What If You're A Professional Gambler?
When we say ‘professional gambler’, we mean someone who essentially uses gambling as their main source of income. But even if this is the case and you are a professional gambler, the answer is still no—your winnings are not taxable.

Image of a gambler throwing cardsThis is backed up by the HMRC’s Business Income Manual at BIM22015. Their position is that betting and gambling don’t constitute trading:

“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”.

Gambling winnings, therefore, remain tax-free, regardless of whether it’s your main source of income or a simple hobby. An example of this goes back as far as 1925, in which a man named Alexander Graham was taxed by Inland Revenue. Graham made a living out of betting on horses, so Inland Revenue claimed £300 from him under the 1918 Income Tax Act. This case went to court, where Graham’s lawyers argued that betting on horses couldn’t be considered a trade. The judge eventually ruled that you can’t tax “habit”.

That’s not to say that professional gamblers can’t ever be subject to tax. It can get a little bit complicated. For example, if a professional gambler is being paid an appearance fee for playing at a particular tournament, then this would be a type of income that would be liable for tax.

Here is the manual they refer to....

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22017

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cambridgealex
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« Reply #2 on: September 25, 2018, 02:21:17 PM »


“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”.



"A taxpayer"

What if you are not a taxpayer?
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« Reply #3 on: September 25, 2018, 04:03:43 PM »


“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”.



"A taxpayer"

What if you are not a taxpayer?


There are many taxes other than income tax.

Most of us pay fuel tax, alcohol/tobacco tax, council tax, value added tax etc.
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« Reply #4 on: September 25, 2018, 06:07:24 PM »


“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”.



"A taxpayer"

What if you are not a taxpayer?


I hate it when you are only assumed to be " a taxpayer " if you work. Everyone who resides in the uk is a taxpayer whether they have a " job" or not. We are taxed on almost everything we consume or do  Smiley
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« Reply #5 on: September 25, 2018, 07:06:43 PM »

Revisiting an old issue here, but can anyone find me any Government literature that confirms that gambling earnings in the UK aren't taxable, even if it your primary income? Just had Dad on the phone who's met a lawyer & ex accountant who assured him that if it's your primary income then you DO have to pay tax on it.

I need something official to prove him otherwise. Thanks.

Even if you could easily evade- morally, should we be paying taxes?

Well you don't need to evade so that's good.

Not particularly a 'morally' thing but along those lines; I can't think of any reason why gambling shouldn't be taxed, at a minimum, as capital gains like other forms of investment.




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cambridgealex
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« Reply #6 on: September 25, 2018, 10:17:12 PM »

Thanks all so far
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dakky
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« Reply #7 on: September 25, 2018, 10:24:15 PM »

Not taxable but you should choose to pay national insurance contributions. It's very little, a few pounds a week.
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DungBeetle
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« Reply #8 on: September 26, 2018, 09:34:56 AM »

Revisiting an old issue here, but can anyone find me any Government literature that confirms that gambling earnings in the UK aren't taxable, even if it your primary income? Just had Dad on the phone who's met a lawyer & ex accountant who assured him that if it's your primary income then you DO have to pay tax on it.

I need something official to prove him otherwise. Thanks.

Even if you could easily evade- morally, should we be paying taxes?

Well you don't need to evade so that's good.

Not particularly a 'morally' thing but along those lines; I can't think of any reason why gambling shouldn't be taxed, at a minimum, as capital gains like other forms of investment.






Because the admin burden of verifying millions in brought forward losses isn’t worth the take take.   In the days of 10% surcharge HMRC had a free call option on punters winnings.  By changing the betting duty regime they gave themselves a free put on punters losses.
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buffyslayer1
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« Reply #9 on: September 26, 2018, 11:18:07 AM »

You need a new accountant and lawyer to be honest and I am not joking or trolling. If you google it top results show this immediately, and it seems quite a basic fact to get wrong which would make me worry about the competence of the individuals.


My own accountant found this in a matter of minutes and sent to me when I asked him about this before I started playing professionally.


https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22017

Think someone posted this before but just posting again.




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buffyslayer1
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« Reply #10 on: September 26, 2018, 11:23:16 AM »

Revisiting an old issue here, but can anyone find me any Government literature that confirms that gambling earnings in the UK aren't taxable, even if it your primary income? Just had Dad on the phone who's met a lawyer & ex accountant who assured him that if it's your primary income then you DO have to pay tax on it.

I need something official to prove him otherwise. Thanks.

Even if you could easily evade- morally, should we be paying taxes?

Well you don't need to evade so that's good.

Not particularly a 'morally' thing but along those lines; I can't think of any reason why gambling shouldn't be taxed, at a minimum, as capital gains like other forms of investment.






I think the UK took this stance because of online betting which would be hard to police to get around taxation and pressure from the UK betting lobby which is pretty powerful.

I guess also it would get very messy from a admin point of view for HMRC as well because if they could tax gains then there must be a way you could offset losses otherwise nobody would be gambling. So it would be a nightmare for the tax code/system here ala USA.
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nirvana
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« Reply #11 on: September 26, 2018, 11:34:53 AM »

I think it's worth establishing the principle that net gains should be taxed irrespective of whether it's difficult to collect or anything is actually collected
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DungBeetle
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« Reply #12 on: September 26, 2018, 11:40:19 AM »

I think it's worth establishing the principle that net gains should be taxed irrespective of whether it's difficult to collect or anything is actually collected

It would be a pointless exercise.  Thousands would commit unintentional tax evasion by forgetting about a £50 win in an old Victor Account and you’d need to check people’s declarations for the year or it would be a waste of time.  HMRC already effectively taxes punters’ losses via betting duty.
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buffyslayer1
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« Reply #13 on: September 26, 2018, 11:43:02 AM »

I think it's worth establishing the principle that net gains should be taxed irrespective of whether it's difficult to collect or anything is actually collected

I agree actually even as someone who primarily makes their income via poker.

I think the UK betting industry plays a larger part in why it's not taxed than difficulty collecting.

Wasn't there a court case about 15 years back between a poker club and the government where they tried to prove poker was a skill game and to be taxed which would have allowed them a licence for the club to be legal?

I don't recall the details but I think they lost (well they must have done). Anyone recall/know the details?

 Just had another thought wouldn't actually taxing gambling result in a net loss of tax. If you could write off losses since majority of people lose when they gamble it would just reduce the net tax people paid.
« Last Edit: September 26, 2018, 11:45:14 AM by buffyslayer1 » Logged

doubleup
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« Reply #14 on: September 26, 2018, 12:05:41 PM »

Revisiting an old issue here, but can anyone find me any Government literature that confirms that gambling earnings in the UK aren't taxable, even if it your primary income? Just had Dad on the phone who's met a lawyer & ex accountant who assured him that if it's your primary income then you DO have to pay tax on it.

I need something official to prove him otherwise. Thanks.

Even if you could easily evade- morally, should we be paying taxes?

Well you don't need to evade so that's good.

Not particularly a 'morally' thing but along those lines; I can't think of any reason why gambling shouldn't be taxed, at a minimum, as capital gains like other forms of investment.






I think the UK took this stance because of online betting which would be hard to police to get around taxation and pressure from the UK betting lobby which is pretty powerful.

I guess also it would get very messy from a admin point of view for HMRC as well because if they could tax gains then there must be a way you could offset losses otherwise nobody would be gambling. So it would be a nightmare for the tax code/system here ala USA.

the "stance" was taken decades ago, before computers existed much less online betting.

The settled law is that gambling is not a profession or trade and therefore can't be taxed as income under the present schedules.  The govt could create a new tax schedule specifically for gambling, but as you point out this would be an admin nightmare and result in millions more people having to complete tax returns and would also be virtually unenforceable (easy to manufacture losses in casinos for example).  So very unlikely to be a revenue source.

Having said that I do think that there are some areas that sail pretty close to the wind as being "organised efforts" and therefore taxable businesses.  Large scale poker staking and automated market making on betfair being the two main ones.    

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Wasn't there a court case about 15 years back between a poker club and the government where they tried to prove poker was a skill game and to be taxed which would have allowed them a licence for the club to be legal?

Skill is completely irrelevant to the tax position and skill at cards was specifically mentioned in the judgement
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