Are Poker Winnings Taxed In The UK?
The short answer to the question is: no you don’t pay any direct tax on gambling poker winnings in the UK. And this goes for both live and online winnings. Instead, the government gets its pound of flesh, 25% on the betting spend of UK residents to be precise, direct from the bookmakers and casinos themselves. It is of course entirely possible that this cost may pass on to the casino-goers indirectly in the form of rake.
For a longer answer, let’s look at some other questions covering such subjects as winnings made abroad, claiming for loss, how we compare with the tax situation in other countries, and differences between land-based and online winnings.
Tax changes in the UK since the early 2000s
For the first time since the 60s, the Labour government got rid of consumer taxes on gambling in 2002. The 2005 Gambling Act that followed saw the creation of the UK Gambling Commission whose remit was to regulate the online Casinos. Among other things the Gambling Act also laid out the approved gaming jurisdictions, transferred licensing authority to local authorities, and made playing poker legal in pubs and clubs.
Doing away with taxation on winnings on sports betting and casino games – on and offline. Was a move set up to encourage the British betting pound to stay in Britain rather than overseas?
The Conservative government brought in the 2104 Gambling Act through which they are attempting to put in line the various online poker sites operating abroad and avoiding taxation.
What about professional poker players?
UK residents do not pay tax on their normal winnings. However, if you are a professional player who may receive free tournament spots which then goes on to win money, you may be liable to pay tax. They may also choose to make National Insurance contributions. It is not the case for the vast majority of players. If in doubt, check with the HMRC.
What about poker winnings from abroad?
In the USA citizens must pay tax on their poker winnings but, by special agreement with the UK, British citizens remain subject to British law and do not have to pay tax on winnings made in America. You will still need to report them to the IRS by presenting your passport and filling out various forms for winnings over $5,000. US citizens who are professional players can write off their gambling losses against tax.
In Canada, most online gamblers use offshore or state-run sites, and only the professionals will have trouble with the taxman.
Australia, where gambling is incredibly popular, has a similar system to the UK in that the operators pay the players taxes rather them.
The situation in Europe differs from country to country. France and Spain have relatively harsh rules and will tax winnings. Whereas in Germany only the professionals will be subject to tax.
To remain the right side of the law, wherever you are playing, you should always keep yourself abreast of any changes in the law. There is no bliss in ignorance as far as the taxman is concerned.
Check out the HMRC guidelines here