Do I Have to Pay Taxes on my Poker Winnings in the UK?
Chances are that you are a professional poker player or make a substantial amount of money playing poker as a hobby when visiting this page. You might wonder whether you are subject to income or another form of tax in the United Kingdom.
As we know many players that are pondering about this ordeal, we decided to write this in-depth article, in which we will cover whether or not you need to pay taxes on your poker winnings in the United Kingdom when playing either online poker or at land-based casinos, poker rooms, and other gambling venues.
Is Poker Taxable in the UK?
No, poker winnings aren’t taxable in the United Kingdom. This counts for both online and offline poker winnings won in Scotland, Wales, Northern Ireland, and England. HM Revenue and Customs also doesn’t make any distinction between professional and recreational gambling.
One of the reasons poker players don’t have to pay any tax is that the casinos and poker rooms are already heavily taxed. Currently, casinos pay a gambling duty of 15% or more of their profits. Additionally, the government doesn’t want to entice UK citizens to deposit and play poker at offshore gambling sites and poker rooms.
One thing to keep in mind as professional poker, though, is that winnings from casinos and poker venues in other countries may be subject to taxation in those jurisdictions according to local laws. If you win a large sum of money in Las Vegas or Macau, for instance, you may have to pay withholding tax in the United States or China.
Why Aren’t Poker Winnings Taxable in the UK?
Poker winnings aren’t taxable in the UK because it is easier for bookkeeping to leave winnings completely untaxed. If (professional) poker players had to pay taxes on their poker winnings, they could possibly claim back losses on tax returns as well. This would create a weird situation as most people lose more than they win.
Keeping Records of Your Poker Play
Although you don’t need to pay any taxes on your poker winnings or keep records of your gameplay, we highly recommend keeping the score of your wins and losses so that you know exactly how much you lose or win. If the tax man ever knocks on your door, you want to be able to show precisely how you are able to afford your lifestyle and don’t want HM Revenue and Customs to think you are hiding or laundering money.
Is Professional Poker Considered Trading?
No, as long as you don’t profit from other people gambling outside of winning poker hands, professional poker isn’t considered trading by HMRC. As we mentioned before, HMRC makes no distinction between recreational or amateur and professional poker players.
To avoid any misconceptions, we do recommend writing to your local tax office, telling them that you derive an income from playing poker. In some cases, you will receive a Code of Practice 10 and will be asked to record your poker winnings and losses on your yearly tax file.
Paying National Insurance as Professional Poker Player
As a professional poker player, you may be delighted to hear that you don’t need to pay National Insurance contributions. The only possible downside to this is that you may receive a reduced state pension the moment you retire. If you choose to register yourself as a self-employed worker at the Chamber of Commerce, you do have to pay contributions, and you will receive a regular state pension. For this reason, it may be interesting to do so.
History of Poker Tax Changes in the UK
In 2002 Chancellor Gordon Brown removed all taxes on gambling winnings, including poker winnings. Prior to this change, a 9% tax was in place for professional gamblers.
In 2005, the Gambling Act changed again, forcing online poker sites to operate from one of the whitelisted gaming jurisdictions such as Malta, the Isle of Man and Gibraltar to be able to accept UK poker players. This new Gambling Act also legalised poker in pubs and clubs across the country and initiated the set up of the UK Gambling Commission, which would oversee all online and land-based gambling activities.
FAQs About Poker Winnings Tax in UK
Is Poker Income Taxable?
If you’re a resident of the United Kingdom, your gambling income will not be taxed, even if you win at offshore casinos that operate under foreign licenses. If you win money with poker abroad in a land-based casino, you may have to pay withholding tax in that country or jurisdiction.
How Much Money Do I Need To Win With Poker To Pay Taxes?
According to the Gambling Act and legislation set by the UK Gambling Commission, it doesn’t matter whether you win £2 or £2 million with poker. Your poker winnings aren’t taxed in the United Kingdom.
Are Poker Winnings Taxed In Wales?
No, poker winnings aren’t taxed in Scotland, Wales, Northern Ireland, and England. This means that you get to keep all your earnings and that you don’t have to file any additional taxes for your poker profits.