Gambling and Taxes in the United Kingdom

From thereon, until 1960, gambling was illegal in the United Kingdom, with the exception of the Tote. The Gaming Act of 1960 loosened the reins and allowed gambling that wasn’t sanctioned by the government for the first time. From 1960 until 2001, there had been some sort of betting duty on all gambling winnings. In 2001, that duty stood at 6.75 percent, and punters had to pay 9 percent when they won.

Gordon Brown and His 2001 Order

Gordon Brown issued a proclamation as Chancellor of the Exchequer that abolished the 6.75-percent duty paid by the bookmakers and the 9-percent tax paid by the bettors. Gamblers had lots of questions. Was there still going to be a gambling tax? No, there was no longer a tax on gambling winnings for bettors. What about a tax on casino wins? No, there was no longer a tax for bettors who won money in casinos. Was there a gambling winnings tax? No, there was no new tax on gambling winnings. This also applied to the winnings of “professional” gamblers, but such gamblers still had to pay taxes on earnings the derived from making appearances or speeches or teaching classes.

Are gambling profits taxed? After Brown’s announcement, bookmakers began paying 15p of every pound they earned in profit instead of passing the burden on to the bettors. Another question that everyone was asking was: Were gambling losses tax deductible? The answer was both yes and no. British bettors were then allowed to deduct gambling losses; however, they were only allowed to deduct losses that equaled their winnings. For example, if someone lost 1,500 pounds on the races at Ascot and won only 200 pounds on scratch tickets, that person would only be allowed to deduct 200 of the 1,500 pounds lost on the horses. These changes remain in effect today.

Why Did Brown Issue the Proclamation?

When the internet’s popularity began exploding shortly before the turn of the century, gamblers in the United Kingdom who had been shouldering the 9-percent tax burden ever since the enactment of the Gaming Act of 1960 began to see other options for gambling online where they didn’t have to pay the tax. British bookmakers began losing not only market share but also great amounts of money. By issuing the order, Brown sought to level the playing field and entice British gamblers to gamble at home again instead of abroad. As a result of his action, Brown virtually assured that Labor would succeed in the next election.

The Changes of 2014

In 2014, the government changed the laws regarding gambling taxes in the United Kingdom. From 2001 – 2014, offshore companies that provided gambling services were not liable for the 15-percent tax paid by British companies. After December 1, 2014, offshore companies that provided gambling services to British patrons started paying the same 15-percent tax on profits as British companies. For the first time, the British government required offshore companies to hold applicable British gaming licenses to do business in the United Kingdom.

During the 13 years between Brown’s announcement and the law changes of 2014, many companies with less-than-honest business practices set up shop in the United Kingdom. The 2014 law tightened the qualifications for obtaining licenses and increased oversight to keep such disreputable characters at bay and keep gambling a fair and open pastime in the United Kingdom.