Income Tax on Gambling Winnings

[mohbud]

Incredulum, the opening balance of the fund would be approximately £40,000 of which £12,000 is my own capital. The expected profit for the 10 months is 400% so the expected end balance is £200,000 net of costs.

[Incredulum]

Wow!

That really does sound like a trade, and I really do think you should revisit the position of your own profits over the last year and work out whether you should have been paying tax on them.

That said, I wonder what would happen if you were to make a loss. Would HMRC really let you offset it against your other income?

On the basis that you are conducting a trade, you may find incorporation is worthwhile. Yes, you certainly need a formal written agreement with your other "investors". If I were running it, I'd be afraid that all the money disappeared and the friends came after me wanting it back. If the money has been put into a company then they will find it harder to argue that you owe it to them.