Tax on Gambling Winnings

This tax treatment applies to money received from any form of betting or gambling, and means casual gamblers' profits are not subject to Income Tax or Capital Gains Tax.

There is no need to declare or include gambling winnings in a Self Assessment tax return.

But if your gambling activity reaches a professional level, or is treated as a trade, your winnings can potentially become liable to tax as trading income.

The key distinction, in HMRC’s own words, is between "casual gambling receipts" for the average person and cases of "trading income from gambling or gaming activities".

To avoid crossing from a non-taxable hobby into a revenue-generating hobby, HMRC may treat professional gambling as trading income if it amounts to a trade, profession or vocation.

What happens to the money after the gambling win, along with the size of the win and how regular it is, could push your gambling from a personal activity into a trade. HMRC considers factors like regularity and business-like organization when determining if gambling is a trade.

If you are concerned that you might fall into that category, seek advice tailored to your individual circumstances. If not, then a win is just a win, and tax will not be liable on it for the average player.

The other occasions when you might query whether a win has tax implications are if the money gets made into money by earning more money through interest paid by a bank or building society, or through an accrual of funds.

Interest and increases in the value of money are generally liable to tax, and whether a gambling win that has been sitting in a bank account would be treated as investment property rather than personal would need to be verified.

Same for if a gambling win from one person was split between gamers – could that create any tax implications for the recipients?

With gambling winnings, as with so much else in the tax world, What seems simple is often more complicated than it appears, and the key points to check are establishing whether the gambling activity is treated as a trade, whether the resulting winnings are further invested or converted into taxable income.