Professional Gambler & Income Tax

[nojmeister]

It seems a great many of you are mistaken over this tax issue.

In the UK, income tax is not paid on RECREATIONAL gambling profits (whether it be horse race betting, poker playing...or anything of that nature) This is because, as you have already stated in this forum, gamblers could claim tax back on losses.

However, PROFESSIONAL gambling is completely taxable and all profits must be declared to the IR, just as a business must. Currently, there is no threshold to determine what constitutes a professional gambler. These matters are looked at on a case by case basis. There are two main factors which are likely to determine whether you are a professional or merely a recreational gambler:

1. Do you make an organised attempt to make money out of the gambling public...i.e. do you undertake some sort of strategy, such that you expect to make a profit over the long term?

2. Are gambling profits your primary source of income? i.e. do your gambling profits outweigh all of your other sources of income?

If your answer is YES to BOTH of these, then you should declare your profits to the IR.

For example, Re: Mr garysmith above. If you have another job which pays more than £180000 p.a. you have nothing to worry about. If not, i'm sorry to say you must pay income tax on those profits.

It's also worth mentioning that the IR does not take ignorance as an excuse in such matters. If you are a professional gambler...it's best to declare your income and pay your tax as you go, rather than being found out later and having to pay all of the back-dated tax + hefty fines!

Please note: this is the situation at the date I am writing this. In the future, this situation may change.

I hope this helps.

[angelshe]

Assuming Nojmeister is correct and a Professional Gambler (gambling profits are their primary source of income) does have to pay income tax:

1. Would they be able to claim expenses?

2. For what period could they deduct gambling losses?

For example, for several months I have been making a net profit from gambling and have not had any other income. I intend to continue this in the future. However, I have had several years of net losses prior to that. Could I claim back Income Tax from previous years, when I have been working, for the losses incurred from gambling?

I would appreciate any advice on these matters. It would be particularly interesting to hear from anyone who has contaced the IR directly for advice on any of these matters.

Kind Regards

[darthy]

nojmeister, have you got any Case Law to back that up? The Graham v Green case, concerned a man whose sole means of livelihood came from betting on horses at starting prices and his activities did not constitute a trade and his winnings were not taxable. I am not sure why the "primary source of income" is relevant.

[mcgin]

I stumbled across this on the inland revenue site. My interpretation of it (which is worth nothing, I'd get a tax experts opinion) is that no tax is payable on gambling winnings regardless of whether it is your full time occupation or not.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22000.htm

Anyone else got any thoughts?

[lucky_scrote]

I need help!!

I 18 years old and am a proffesional poker player who has won a large sum of money since i have decided to make this my job, the thing is i have not declared that i am doing this for a living and am not sure wether i have to pay taxes on my winnings. Anyone know what i have to do or who i can advice from?

[The Gambler]

I think this is most appropriate document on the Inland Revenue site:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm

I could be wrong but I think the wording has changed since I first saw it and it now seems to definitely state that gambling is not taxable.

"The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade"

[Lostboy]

The same site also states that:

"An organised activity to make profits out of the gambling public will normally amount to trading. An example of this is the bookmaker"

Now since I have recently begun to make my main income from acting as a bookmaker on online betting sites; ie. I lay to lose, does that now make me a bookmaker and therefore am I liable for tax? I think I'd better write to the Revenue!

[Lostboy]

I've also just found this at http://www.probabilitytheory.info/topics/efficiency_betting_market.htm which I think sums it all up rather well. The taxman won't be bothering me after all!

"Tax is not payable on gambling winnings. Why?

Most of this is based on the fact that betting markets are efficient... At the end of the day if the market is efficient and the provider of the betting service is overround or taking a commision, this effectively pushes the punter into an inevitable loss making situation in aggregate to the benefit of the provider of the gambling service. While there may be pockets of people that have beaten the market these will be small and to the far right of the bell curve, the majority will lose. To only tax the individuals that win is folly. Also to tax individuals for gambling income would mean giving relief for losses and expenses. As we know, the aggregate of gamblers lose in total and this would mean the tax man providing relief for all. This is not a sensible situation at all from a tax collection perspective. Because the provider of the gambling services will almost certainly make a profit at the gamblers expense it makes better sense to enforce tax collection at this point where winning and taxable income is ensured. "

Sic Transit Gloria Mundi

[The Gambler]

Just because you lay a horse to lose on a betting exchange does not mean you are acting as a bookmaker.

You are merely backing a horse to lose - it is still just a bet.

If you went into a High Street bookmaker and backed horse A in a 2 horse race that wouldn't make you a bookmaker either. Backing horse A is in effect the same as laying Horse B.

The same applies if you laid a horse in a 10 runner race you are just backing the other 9.

[Gambler369]

Dose LTD company which will make profit ONLY in online casino will pay any taxes? No tips or advise will be given to other people, no money will be taken from other people, it'll bet only from they own capital.
Or is it better to trade as sole treader for tax purpose?
Thank you.