Gambling Taxes Uk
- The UK has a tiered tax system where casinos pay a fixed percentage based on their revenue. Starting at 15 percent on anything up to £2,370,500, this increases accordingly to 20 percent, 30.
- Who Pays Gambling Taxes in the UK? Instead of going after gamblers, the UK government has adopted a much simpler solution. All casinos pay a 15% tax on their profits, in addition to the standard income tax. In 2018, this tax brought £2.9 billion to Her Majesty’s Revenue and Customs, the government’s department in charge of collecting taxes.
Can gambling be taxed as earnings? Julie Butler considers a recent case on gambling which covers issues frequently raised in the TaxationWeb forum.
The Gambling Act of 2005 paved the way for online casinos, online poker, and TV advertising for sports betting. In other words, the new legislation got companies right into people’s living rooms. Gambling tax revenue. The gambling sector’s income, together with government gambling tax revenue, was £8.36 billion in the period Apr 2007.
Gambling and Taxation
Essentially betting is ‘tax-free’ in the UK – the professional gambler is outside the scope of tax. This is confirmed in HMRC’s Business Income Manual at BIM22015. The basic position is that betting and gambling, as such, do not constitute trading. This is not a new precedent either. Rowlatt J said in Graham v Green (1925) 9 TC 309: “A bet is merely an irrational agreement that one person should pay another person on the happening of an event.”
This decision has stood the test of time. In an Australian case, Evans v FCT (1989) 20 ATC 4540, Hill J said: “There has been no decision of a court in Australia nor, so far as I am aware, in the United Kingdom where it has been held that a mere punter was carrying on a business.”
A recent case has tested this principle. In Hakki v Secretary of State for Work and Pensions [2014] EWCA Civ 530 Mr Hakki was a professional poker player who made a living from his poker winnings. An order for Mr Hakki to pay child maintenance was applied for through the Child Support Agency by the mother of his children (Mrs Blair).
In accordance with the Social Security Contributions and Benefits Act 1992 (SSCBA 1992) s2(1)(b) and the Child Support (Maintenance Assessment and Special Cases) Regulations 1992 Mr Hakki opposed the application on the grounds that his poker winnings did not constitute ‘earnings’ from gainful employment and therefore he was not a self-employed earner, i.e., the profits arose from gambling.
It is very interesting to note that the Upper Tribunal found that for the purposes of SSCBA 1992, gambling could be a trade, profession or vocation, and that Mr Hakki could be said to be ‘gainfully employed’ as a ‘self-employed earner’ and therefore should pay child maintenance to Mrs Blair.
Mr Hakki appealed to the Court of Appeal. Mrs Blair’s barrister argued that Hakki’s poker playing amounted to a trade similar to that of a professional golfer or tennis player. The barrister relied on the findings that Mr Hakki:
- Set a target sum to win after which he stopped;
- Selected the table which was most likely to pay him;
- Appeared on a television programme about poker for a few weeks, made it to the final and won a prize;
- Was the owner of his own website and communicated his strategies for online poker;
- Had his poker results over seven or eight years published on two other poker websites; and
- Chose the locations for playing poker.
The Court of Appeal found that even collectively these findings do not amount to such organisation as to constitute a trade, profession or vocation. The Court of Appeal found that gambling is not a trade and the factors surrounding Mr Hakki must be common to many successful gamblers, e.g., choice of location, setting target sums and the table most likely to pay. It was found that isolated appearances on television and Mr Hakki having his own website was not in 2014 evidence of organisation amounting to a trade or profession. It is also very interesting to note that the court was persuaded that it is possible to accept a case in which a gambler’s winnings might be taxable, but it found that in this case there was no organised seeking of emoluments and therefore no gainful employment.
Gambling Taxes Uk Calculator
This case adds to the ongoing discussion about whether a gambler in certain circumstances can be taxed on his or her winnings.
Will there be future legislation that brings gambling profits into the scope of taxation? There has apparently been nothing to indicate that this is under review despite the advent of very sophisticated techniques to make substantial profits from gambling. It has to be asked, what is “the case” that the courts can find as taxable? Is that perhaps the case with sophisticated software?
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UK gambling tax will go up to 21{44b09f69e02b4a9880bf6e3f987d2afd285263f93639dabf176d3ae6ad2c79c6}, posing new difficulties for the industry in the country. The measures are coming into effect in October, 2019
New Tax Challenges for the UK Gambling Industry
On Monday,October 29, the UK Treasury convened to decide on a number of issues regarding the future budget. Chancellor Phillip Hammond was among the attendees who delivered a set of proposed measures that affect the gambling industry specifically.
During his budget speech, Mr. Hammond noted that there would be a rise in the Remote Gambling Duty (RGD), which will target all iGaming operators offering anything from video slots, and their variations, to blackjack and poker.
This move is planned as a specific way to offset any losses in tax revenue that may ensue from the fact that businesses operating fixed-odds betting terminals (FOBTs) have been asked to reduce the maximum stake from £100 to £2, which may have a significant impact on how much income gambling operators register once the measure comes into effect.
The rate was increased to 21{44b09f69e02b4a9880bf6e3f987d2afd285263f93639dabf176d3ae6ad2c79c6} from the current 15{44b09f69e02b4a9880bf6e3f987d2afd285263f93639dabf176d3ae6ad2c79c6} levels. The government estimated that by revving up the tax rate, the coffers will get additional $166 million in the next two years, and this number will go significantly up in the two years after, with the raked-in tax going up to $326 million.
Despite the new changes, though, there has been no exact time frame as to when FOBTs’ £2 regulation will trigger whereas the new tax hike is arriving in October 2019.This lack of consistency has worried business representatives who have been eager to get exact date so that they may prepare fully for the upcoming regulatory changes.
The Remote Gambling Association Advises Caution
While the debate still raged, one body, to name the Remote Gambling Association (RGA), made significant efforts to caution the government against any rushed-up decisions to bring the tax rate too high.
The RGA pointed out that anything beyond the 20-per-cent-threshold would squeeze businesses to the point that they may need to start cutting jobs, which in turn, may lead to the Treasury losing tax money.
The UK is a mature market now. The increase in regulation and tax burden are making it less attractive. – RGA Executive Clive Hawkswood
According to RGA chief executive Clive Hawkswood, the UK market has reached maturity, which naturally means that legal and regulatory measures will be toughening up and readily squeezing established companies for extra pennies, while putting a life-threatening pressure on smaller operators.
As the information we now have stands, the changes to FOBTs may also come into effect in October, 2019 to coincide with the mulled changes in the tax law. This gives businesses one year to fully prepare for the oncoming spate of regulatory changes.
These changes may affect certain businesses in an unpredictable way. For instance, now GVC-owned Ladbrokes may have to reconsider how it pays to shareholders from FOBTs in light of the new regulation.
There are many unknowns further down the road that will need answering and while business prepares to meet regulation, new challenges rise on the road ahead.