Different countries have different rules when it comes to gambling and tax. While some may charge players tax on their winnings, others like the UK, charge taxes on the operators directly for providing gambling services. Because of this, if you’re a resident in the UK, you won’t have to give up any of your gambling returns to the Government in tax form. You are still paying tax it is just taken from the operator and that manifests in poorer value odds ultimately, but you yourself have no tax to pay on either gambling winnings or loses.
Some people have queried whether their gambling losses can be deducted from taxes, though. Before we get on to that question we want to look at record-keeping. You see, it is often good to keep records of your online and offline gambling activity. Whether you’re sports betting, casino gaming, lottery playing, etc. A good record of your gambling operations can be a useful tool, not only for your own tracking purposes, but for any potential future money laundering checks.
No Tax In The UK And No Rebate Either
Your gambling income won’t be taxed in the UK, unlike in some other countries, such as the USA. You keep what you earn. At the same time, you cannot deduct any losses that you might accrue.
Gambling is classed as a hobby or pastime in the UK, rather than a trade or a type of employment and any money is not taxable, meaning losses are not able to be offset as a result. Most gamblers make net losses, so if you could do so in the UK, it would be a drain on the tax revenue in place.
If you were to gamble in the United States as a resident, on the other hand, then you would be able to deduct losses this way. Because any funds you earn there are taxable, and you must declare them on a tax return, it stands to reason that it is only fair if losses are deductible from such. Gambling losses in America are only tax deductible up to the received amount, though. As a result, you can claim a loss in gambling losses.
If you acquired $10,000 from gambling but your total losses equated to $15,000, you can only claim a loss of $10,000. Various other countries have similar policies in place regarding gambling and taxation.
Why Keep Records If There Is No Tax?
The good reason to keep records of gambling winnings especially is so you can prove where money comes from. Let’s say you win a big amount like £50,000 and you want to go and use some of that money buy an expensive car, put towards a mortgage or invest it. Companies need to check where that money comes from to prevent them being used to launder money.
Without any record of where your winnings came from it would be difficult to use or invest that money. Therefore if you have a record you can prove you won the money, where and when. This is important if you want to use that money for large purchases.
You can also declare gambling winnings on a tax return. This isn’t a legal requirement but acts as another proof should anyone query where your money came from.