Online Gambling Tax Uk
Players are not required to pay taxes on winnings from online or land based casinos in the United Kingdom. UK gambling tax applies to casino operators, who are required to pay 2.5-40% of their gross gaming revenue. The United Kingdom has a wide variety of casinos, with around 24 in London, 13 in Scotland and 5 in Wales. According to news circulating around the web, the UK is planning a 21% increase for gambling tax rates, potentially severing any new additions to its gambling industry and making all of the veterans fight for their lives. The UK does not tax gambling winnings. In fact, even British gamblers who play abroad won’t need to worry as the UK has treaties with other countries, so you won’t be affected by their tax. To make up these losses the government plan to increase the taxes paid by the gambling operator that is located outside the UK. Currently, the POC online gambling tax rate is set at 15% but there are plans to increase the amount up to 21% which would cover the lost revenue from the FOBTs restrictions.
Online betting companies based in offshore havens to sidestep Britain's gambling taxes will be hit with a new levy that may raise £300m for the taxpayer.
The Government is to impose a 15% tax rate on operators in the £2bn remote gambling market.
The rules state that from December 2014 gambling must be taxed according to where customers are based rather than where the online operator is registered.
'It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the Government is taking decisive action to ensure this can no longer happen,' Economic Secretary to the Treasury Sajid Javid said.
'These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.'
The shift will affect some of the industry's largest players.
Ladbrokes, Bwin.party, William Hill and Betfair all have online operations based in Gibraltar, where taxes are levied at 1% and capped at £425,000.
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The proposed 15% rate, which the Government said will be confirmed in its Budget statement next March, would mean that offshore operators are taxed at the same level as domestic internet betting companies.
Officials estimates that the new rules will bring in £300m a year in additional tax revenue.
Plans to bring offshore gaming companies under the UK tax system were outlined in the 2012 Budget, but the industry had been waiting for the detail - most crucially the rate at which they will be taxed.
William Hill, which has the largest share of the UK's remote gambling market, has previously suggested that it could challenge the changes on the grounds that they breach European Union competition law.
The Gambling Commission said that the estimated worldwide remote gross gambling yield (GGY) - excluding telephone betting - was £21.08bn during 2012, up 5% on the previous year.
It said the UK consumer GGY generated with operators regulated overseas, which includes telephone betting, is estimated to have grown approximately 1% between 2011 and 2012.
The commission said remote GGY for operators licensed in Great Britain accounts for approximately 4% of the global total.
It’s difficult to do anything in life without having to pay the government in the form of tax. So surely the gambling industry is no exception?
If you expect you need to declare your gambling winnings to the government, you might be in for a surprise.
The gambling tax explained
The UK gambling tax system is very advantageous to players. Not only does it work out in your favour, but it is also incredibly easy to understand.
Whenever you gamble in the UK, you are not required to pay any tax whatsoever. You don’t have to pay tax on your winnings and there’s also no need to pay any tax on your initial stake either.
This, of course, means you don’t need to report your winnings to the taxman. If you win £5,000 at an online casino, you get to keep that amount in full! This is a great improvement on the policies of other countries where you don’t actually get to keep all of your winnings.
Who gets taxed?
So how is this all possible? The gambling industry is worth a lot of money, so why is the government not taxing it?
Instead of taxing the players, the UK government actually taxes the operators. But this wasn’t always the case. In the past, you used to pay a tax to the government either as a tax on your stake or as a tax on your winnings. What changed then?
Online Gaming Tax Uk
In 2002, the UK government was concerned the British gambling industry wasn’t going to be able to compete with the rise of online gambling sites in UK. This led the government to .
As we can see today, the decision was a successful one. The UK gambling industry is still alive and well to this day.
What about professional gamblers?
Professional gamblers might actually have one of the only professions that are not actually taxed in the UK. If you are lucky enough to gamble for a living, you don’t need to pay the tax man a penny on your gambling winnings.
The reasoning for this is fairly simple. If the government was allowed to tax you for doing a certain activity such as gambling, under the current tax system, you would have the ability to claim money back from the government for your losses.
The UK government does not want to open the floodgates for everyone who loses money gambling to claim money back. Not only does this mean professional gamblers won’t ever be taxed, but it also means the gambling tax is unlikely to return any time soon.
How did operators react?
It’s no surprise that casino operators were not too thrilled about this new taxation system. Operators looked for a way to pay as little tax as possible.
Some of them starting running their businesses out of “tax haven” countries. These countries require casino companies to only pay a very small amount of tax compared to the UK. This is a big reason you will see certain countries such as Malta coming up over and over again in the gambling industry; they offer very favourable tax rates to casino operators.
Unfortunately for the operators, the UK government took a stand against this practice. They introduced the Point of Consumption Tax (POCT).
Enjoy tax-free gambling
The tax system for players in the UK is elegantly simple. You don’t pay any tax whatsoever on any kind of gambling transaction. It’s the operators who have to worry about navigating the UK tax system, not the players.
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