3 Common Misconceptions About Gambling Tax
When it comes to the UK gambling tax, there is a lot of misinformation out there. There are a few reasons for this.
Firstly, the gambling tax has changed over time. Many people, especially in the older generation, might not realize that times have changed.
Also, gambling laws are not the same everywhere in the world. Sometimes, they are similar and other times, they can be completely different.
This article will look at some of the different ways people get it wrong when it comes to the gambling tax.
You will be taxed on your winnings
This is one of the biggest misconceptions about the UK gambling tax. According to this article, whenever you gamble, you don’t need to pay any tax whatsoever. Both your wagers and your winnings are completely tax-free.
But surely the government has to make money from the industry somehow? Rather than taxing the players, the UK government has decided to tax the operators exclusively.
So why do so many people seem to think you will be taxed on your winnings? Well, it wasn’t always this way. In fact, the introduction of tax-free gambling for players is actually quite a recent thing.
After 1960, when gambling was officially made legal, players would have to pay a 9% tax. Whenever you placed a bet, you had a choice: you could apply the tax to either your wager or to your winnings.
Over the years, the tax was lowered until it was abolished completely in 2002. The reason for getting rid of the tax was to keep UK-based operators competitive within the emerging international market. These days, the casino operator must pay a 15% tax on all profits.
So surely if you are lucky enough to be a professional gambler, you have to pay a tax on your winnings? Surprisingly, this is not the case. The reason for this is simple: the government simply doesn’t consider gambling to be a “taxable trade”.
Every other country is the same as the UK
While UK-based gamblers are lucky enough to not pay any tax, in actuality, this doesn’t apply to every country. If you are planning on taking a vacation and checking out the casinos or making some sports bets, take a look at the local rules and regulations first.
In many of the UK’s closest neighbours in the EU, you will be charged a tax on your gambling winnings. For example, in the Netherlands, your winnings will be subject to a tax.
The casino operators also have to pay a different tax depending on the country. A 15% tax might seem high, but in other countries, that tax could be as high as 30%!
Taxing players will return
Many people speculate that the gambling tax will one day return. If you look at the facts, you will find that this doesn’t seem very likely.
It’s not down to the government feeling generous; bringing back the tax under the current taxation system could actually lose the government a lot of money. Under present tax law, if a tax is implemented on a profitable activity, there also needs to be a way for people to claim allowances for losses. Naturally, this would be a disastrous policy for gambling.
Enjoy tax-free bets
So there you have it: unless you are a casino operator, you don’t really have anything to worry about regarding tax. Even if gambling is your sole source of income, you don’t need to pay the government a penny.
Make sure you check the rules and regulations whenever you plan on playing outside of the UK; not every government has such a generous policy. Otherwise, check out the best UK online casinos to get started on your tax-free bets.
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