A huge number of us are now enjoying online bingo in the UK and we have a greater choice than ever before of bingo sites to play at and types of games to play. As a result, it also means that there are more winners than ever before. This has led many people to wonder about the dreaded taxman; do we have to pay tax on our online bingo winnings? If this is something that worries you, read on for all the answers you could need.
Over the years, the gambling tax laws in the UK have changed considerably. Those of us above a certain age will remember having to pay Betting Duty on certain gambling winnings. Luckily, this all changed in 2001 when the government abolished Betting Duty. Since then, all gambling winnings have been gloriously tax-free.
Interestingly, the government brought about this change in order to encourage more people to gamble and in turn, boost the UK’s economy. The government took the sensible attitude that most people gamble for fun rather than professionally and as a result, it would be wrong to tax them on their winnings. As a result, if you win a £100 million lottery jackpot, £5 playing bingo or anything in between, the money is yours to keep tax-free.
To begin with, it is highly unlikely that you are classified as a professional gambler or bingo player. However, even if bingo, or any other form of gambling, is your main source of income and you are a professional, you still do not have to pay tax on your bingo winnings.
According to His Majesty’s Revenue and Customs (HMRC), and the verdict in a number of court cases, gambling is not considered a taxable trade. In HMRC’s Business Income Manual it states, “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.”
Professional bingo players need to be aware of one exception. If you are earning money from bingo related activities, such as giving talks that you are paid for, then this money is likely taxable. Furthermore, it is worth keeping careful track of your winnings and losses just in case the taxman ever comes knocking and looking for evidence of your source of income.
If you are considering becoming a professional bingo player, then there are other financial repercussions that you should consider. For example, you are likely to find it hard to obtain a mortgage or even a simple bank loan. Furthermore, you should be sure to make voluntary National Insurance contributions so that you can maintain your State Pension entitlement.
There is no denying that the taxation system in the UK is extremely beneficial to gamblers. However, your winnings may be taxed in a few scenarios.
For example, if you use your winnings to invest and your investments are successful, then you will have to pay capital gains tax. A less happy scenario is that you pass away and you have left your money to other people. Those who inherit from you would have to pay inheritance tax.
Both of the above scenarios are only really applicable in the case of life-changing wins. However, these do happen from time to time, some online bingo sites offer enormous jackpots. If you are lucky enough to hit a hug jackpot, then it is essential that you consult with a financial adviser who will guide you through your options.
The situation in the UK is not unique; there are several countries around the world where players do not have to pay tax on winnings including:
However, if you do live in one of those countries, then be sure to double check the regulations. For instance, not all countries are as relaxed about professional gamblers as the UK is.
Of course, there are countries where you do have to pay tax on bingo winnings. Famously, in the United States, bingo winnings are taxable and must be reported on tax returns. However, if you are on holiday in Las Vegas, then you will not have to pay tax on any of your winnings, so you can try your luck on the Strip without having to worry about tax repercussions.
With the UK’s tax-free status on gambling returns, players can enjoy their online bingo winnings without any worries. So go ahead and have fun playing your favourite games, and always remember to gamble responsibly!