Tax treatment UK Pro bettor

[Willem]

I am a bettor from the Netherlands. Currently I can make a reasonable income with a proven edge by betting. Unfortunately, due to the Dutch tax framework, it is nearly impossible to structure this income in a proper way. For this reason I am thinking about emigration to the UK. Since it is a very specific situation, it is very hard to find any tax legislation on this field from the UK-government. Can someone give a comment on how a professional bettor (someone who's income is 100% betting income) is generally treated under the English tax laws? Or do you know any advisory who is specialized in this field? I am not looking for a solution like a Ltd with only a PO Box. Thank you!

Regards,
Willem

[hgodden]

Pro gamblers (including betfair traders) don't have to pay tax at all. Many times I've seen a link on this forum which directs you to the Inland Revenue (official government department in the UK dealing with tax) webpage which explains that pro gamblers are not subject to tax. If you search the archives you will find the answers you are looking for, but to sum up, you wont have to pay tax if you move to the UK and (most likely) any change in government wont change that.

[Willem]

Hi Hgodden,

Thanks, I founded the case Graham vs Green on the Inland Revenue website regarding a professional punter in 1925. Is'nt it too good to be true that professional gambling is complete tax free in the UK?

Regards,
Willem

[andyfuller]

Don't forget the Betfair tax, opps I mean Premium Charge!

[Stewart]

Oh Andy you are a naughty boy!

Betfair has consulted it's clientel are we all suggested having a premium charge of 20% for the lifetime of the account, poor API performance on Saturday afternoons and keeping us all on our toes by regularly not taking markets in play.

[hgodden]

Hi Hgodden,

Thanks, I founded the case Graham vs Green on the Inland Revenue website regarding a professional punter in 1925. Is'nt it too good to be true that professional gambling is complete tax free in the UK?

Regards,
Willem

Maybe it seems to good to be true(!) but I can assure you it isn't. Very very few people actually make money from gambling so the government in this country don't go after them, if they did then they could claim back money on losses - something which all the losers out there could also do. I can't find the link now but there is a page on the Inland Revenue site which clearly states that gambling, however organised, is not taxable in the UK.

[andyfuller]

Very very few people actually make money from gambling so the government in this country don't go after them, if they did then they could claim back money on losses - something which all the losers out there could also do.

This line gets trotted out every time someone brings up taxation on gambling. It is a load of rubbish I am afraid.

On the 6th October 2001 the UK government changed the way they taxed gambling. Under the old system the punter paid 9% tax on their bet.

However, with a gentleman's agreement with the bookmakers they removed this tax and changed to a gross profits tax on the bookmakers on the understanding that the bookmakers would remain onshore.

This meant the creation of several thousand new jobs within the UK upon which the government earned tax. Investment was attracted to the country upon which the government earned more tax and paid less in benefits etc.

Furthermore as they remained onshore they paid into the levy scheme which funds racing which creates hundreds of jobs etc.

This change in taxation opened up the way for exchanges as well as people could then place bets without paying tax.

There was no legal agreement made that they were to remain onshore.

Hence why there was all the fuss recently when they started to move offshore. Unfortunately the government has no way of stopping them leaving (at present - look towards America for an example of how they can stop them leaving!). This has led to the loss of a lot of jobs and funding for racing. Which looks to get worse in the future as telephone and online betting no longer has any need to be based in the UK, so they can move abroad and pay much less gross profits tax on this part of their business. Of course they can't move their betting shops offshore - they are here to stay.

So will the government be looking at changing the way betting is taxed - I would say it is safe to say they will be given the state of the public finances and the fact the bookies are moving offshore to avoid paying tax on the money bet by people in the UK via the telephone or over the internet.

As for people being able to offset their losses - I am affraid that is rubbish, find me one person who under the old system was able to do that? You paid your tax on your bet just as you pay your tax on your petrol.

You may want to have a read of this document from HMRC about the change:

http://www.hm-treasury.gov.uk/press_106_01.htm

Also have a read of:

http://customs.hmrc.gov.uk/channelsPort ... _CL_000519

[MarkWraith]

He was referring to the possibility of introducing Income Tax on net yearly profits from gambling (in which case they would have to give income tax relief on losses), rather than them possibly reintroducing the betting tax.

I really can't understand how the old betting tax worked. I currently play poker professionally, but I played it in casinos prior to 2001 (before there was any online poker), and there was no deduction from each bet made. If there was, no-one would have played as the game becomes immediately impossible to win under such rules. Was it *just* bookmakers who had to pay this kind of tax?

Clearly with any kind of tax on each bet made, trading horse-races etc becomes impossible as well right? My profit on turnover is about 0.2%, so any taxation on betting more than 0.2% makes me into a net loser - and probably there is no-one trading making more than 0.4% or so?

[Bet Angel]

This is a good thread on the matter: -

http://www.taxationweb.co.uk/forum/prof ... t1201.html

Linking to: -

http://www.hmrc.gov.uk/manuals/bimmanual/BIM22015.htm

[LeTiss]

This is a good thread on the matter: -

http://www.taxationweb.co.uk/forum/prof ... t1201.html

Linking to: -

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

The HMRC description is an interesting one. They're suggesting gambling is either a habit or vocation, and anyone who makes money is either lucky or has skill over the bookmaker. However, you can use this mentality to describe many other forms of money making that is taxable. Part of the problem is that's difficult to enforce. If a professional gambler had to pay taxes, how many would submit honest figures to the Inland Revenue, it would be like catching leaves on a windy day

[Willem]

Thank you for the comments. Very interesting links. My conclusion from the taxationweb discussion is that you pay income tax as a pro punter. If you win systematic, you can deduct occasional losses. If lose more than win on the long term, you can not deduct your losses.

Very interesting report on the GPT. A pitty it is from 2003. It would be interesting to know how the government is currently looking at their policy. Would indeed be terrible if they put back the levy from before 2001 because the industry is going offshore. At the other hand you should expect the industry would not be so stupid to kill their own bussinescase? As far as I know, Betfair is currently only offshore for international customers with their Malta server, and not for UK customers?

Besides from the financial aspect, the government can change their policy on 'moral' reasons. Since I am not from the UK, I don't follow the English politics. Is there never a discussion in the papers or the parliament about the increase in betting from the implemented policy in 2001? I can imagine policy can change when the Conservatives win the elections?


Regards,
Willem

[sbetts]

I read it and came to the opposite conclusion (especially after reading http://www.hmrc.gov.uk/manuals/bimmanual/BIM22017.htm). Pro punters (in the UK) would not pay tax on their winnings, but bookies would.

If I'm wrong then I know a heck of a lot of professional poker players who are in trouble!

[hgodden]

Here's a question for you then. Out of those people who earn a living trading / betting, how many of you actually file tax returns that include your trading / betting activities?

How many people out there actually make a living from betting / trading? At a guess I would say the number is likely to be very few indeed and arguably would hardly be worth the hassle of introducing new legislation to cover it, let alone enforce it. The government is more than happy to promote gambling due to how much they collect and how many jobs are involved etc. One of the things that makes betting / trading so attractive to people is that its tax free and if you do make consistent profits these are still tax free. Taxing pro gamblers / traders would make this less attractive and discourage people, in the same way that the BF premium charge is doing

[billyford1]

I trained racehorses in Ireland for a number of years and like a lot of trainers i attempted to take a few pound off the bookmakers every now and again.
Would this class me as a professional gambler?
In anycase i can safely say that there is no such legislation in Ireland,i'm sure my accountant would have let me know if there was, and i'm also quite sure that if any govement so much as hinted at it they would be out on their backside's within a month.