Do You Need to Fill in a Tax Return for Gambling Winnings?

man running away from wrecking ball with tax written on itIf you engage in sports betting or any other form of gambling, be that online or offline, the hope is always there that you will receive a return from one or more wagers. The funds are then yours to do with as you like. Yet the question is whether you need to fill out a tax return to declare them to the UK Government.

Gambling and tax is fairly straight forward when it comes to the United Kingdom. To put things simply, nobody in the UK is taxed on their winnings and in theory, you do not need to fill out a tax return to declare them.

Yet even though it isn’t a necessity, it could actually help you out in the long run. Worldwide, unscrupulous people engage in money laundering. Some people must show where their money has come from if they purchase anything large and/or expensive because of this and having a record of any large gambling returns is good in this circumstance.

If you declare any gambling winnings when you fill out a tax return, then you won’t have to pay any tax on them. There will still be an official record of the money on your tax account, though. That can be utilised as a sort of paper trail, proving that the funds you own did not come from the proceeds of crime. Then, if a time comes when you need to buy a car or a house – both expensive items – you can utilise that paper trail.

Taxes on Gambling in the United Kingdom

hmrc websiteIn the United Kingdom, law changes in 2001 mean that tax levies must be paid by gambling operators rather than by bettors themselves. This serves as a Point of Consumption tax, which after amendments in 2018, stands at 21% of their gross gambling profits.

Thus, as a gambler in the UK, you can receive any amount of money from an online or offline gambling company, and not have to pay any tax on it. Whether you get a simple £10 from a casino slot machine or you’re lucky to gain a £100 million jackpot on the EuroMillions lottery, you get to keep every penny.

Therefore, why is having a paper trail a good thing where taxes are concerned?

Well, the UK rules surrounding money laundering regulations changed in 2020. This saw new laws introduced. Working in accordance with the fifth AML directive from the European Union, the laws were tightened. Anyone gaining large sums of money must show where it came from, if requested. You may be aware of your activity at an online sportsbook, but can you prove it to authorities if need be?

Keeping records can help you to show that that is the case. At the same time, you can keep track of your own betting activity this way – people engaging in responsible gambling often record every wager placed, even successful bet, every loss, and so on. Yet even that may not satisfy the authorities on the matter. Ensuring you declare any significant winnings achieved on a tax return could be the best route to take instead.

This will show an official governmental record on where the money came from. This way, you can prove it belongs to you and it was acquired in a completely legal way.