Gambling in the UK has many benefits and is a great place to base yourself whether you’re a pro gambler or whether you just enjoy betting on your favorite teams and sports. Gambling in the UK is totally legal, thoroughly, and independently regulated, and you have many reputable bookmakers to choose from when placing your bets. Significantly, you do not have to pay tax on your winnings, so you keep everything you earn for yourself.
That being said, the UK gambling industry is by no means tax-exempt. HMRC more than make up for not taxing individual winnings by levying duties on gambling operators, from whom they generate a sizeable amount of money in tax every year. In this post, we take a look at how much money the UK government generates every year from taxes taken in from the gambling industry.
How much money does the UK government take in each year from gambling?
The gambling industry generates a substantial amount of income in taxes each year for the UK government. All gambling sites must pay a mandatory 15% levy directly to the UK government on their earnings. This translates into huge figures when we take a look at the statistics researched by Carl at Find Betting Sites. Since 2001 when the betting duty on individual winnings was abolished, the UK government has seen a steady rise in taxes generated from the gambling industry.
In 2019/20, the government received just over £3billion in taxes from the levy imposed on gambling sites. This figure has doubled since 2001 when it sat at just above £1.5billion, an incredible rise in only twenty years, highlighting the popularity of the gambling industry and how advances in technology have enhanced the user experience and allowed more people to access their accounts and gamble more often.
There are, however, slightly different duty categories depending upon what type of service is offered by the gambling company. Lottery companies, for example, are charged under lottery duty, which accounts for 12% of all stake money played in the taxable period.
Are winnings from gambling taxable in the UK?
The short answer to this question is no. Since 2001 when the previous betting duty was abolished, gamblers in the UK have not had to pay taxes on their winnings. Instead, the government opts to collect taxes from the betting companies directly through the 15% levy charged on earnings by gambling companies. This isn’t the same in all countries, making the UK an attractive place to gamble. For example, in gambling mecca Las Vegas, overseas visitors must pay 30% tax on their winnings, while US citizens pay 25% on winnings over $5000US.
What about offshore companies that offer betting services in the UK?
In the UK, offshore companies that provide services to UK gamblers must register with HM Revenue and Customs and pay tax, although there are some exemptions. Offshore companies must pay at least one of the following taxes to provide services in the UK: General Betting Duty, Pool Betting Duty, or Remote Gaming Duty. Ensuring offshore companies pay tax is an effective way of generating substantial revenue for the UK government, as many betting companies are, in fact, based outside of the UK.
Where is most tax generated from within the UK gambling industry?
Let’s take a look at the figures reported by the UK Gambling Commission. We learn that remote gambling is the most significant sector within the gambling industry regarding tax generation. In a 2017 report, the UKGC reported that remote gambling accounted for 34% of the overall market. Within this, slot games from the major casino sites were the most popular type of game.
What can we expect for tax revenues from the gambling industry in the future?
Looking at the statistics from the past twenty years, there has been a steady rise in taxes generated from the gambling industry pretty much year on year, and there’s no reason why this isn’t likely to continue going forward. With COVID-19 affecting our lives and forcing many of us to stay at home, we may well see a steeper rise in taxes generated when figures are released in 2021, as people have had more time to spend on betting sites.
Moreover, with advances in technology such as artificial intelligence, online gambling experiences will only get more immersive and more user friendly, which again is likely to increase its popularity in the UK market. From a slightly different perspective, we expect further regulation within the UK gambling market in 2021, which will see some significant changes brought in. This might have an adverse effect on the popularity of online gambling, but only time will tell.
Whatever happens, it’s clear that the revenue generated in taxes for the UK government by the betting industry has been significant in the past twenty years, and they will hope these continue in the years to come.