Are Bingo Winnings Taxable?
Nothing beats a big win when it comes to playing bingo, but one of the first fears many of us have is about the taxman. We don’t want to pay over the results of our hard-earned dabbing now do we?
But are bingo winnings actually taxable? Aren’t winnings from gambling tax free?
Are Bingo Winnings Tax Free?
The answer is, yes they are tax free and in the UK it doesn’t matter if you’ve won £10 or £10million, you won’t have to pay a penny to HMRC.
This doesn’t just apply to playing bingo games, but all types of bingo win from the likes of slots, to poker, sports betting and beyond.
This wasn’t always the case though and when bingo halls and betting shops were first legalised in the UK, there was a 9% charge for punters on their winnings. This was abolished back in 2001 however, when Gordon Brown announced the change in his budget, instead placing the tax on the gambling companies.
The reason for this is said to be that it just makes it easier to leave winnings untaxed as it would be potentially possible to claim back losses on tax returns.
For bingo sites, they now pay bingo duty, which is 15% of gross profits.
What About Professional Gamblers?
While there aren’t many professional bingo players, if you’re using it as your main source of income, you still aren’t required to pay tax on any winnings.
This is based upon HMRC’s Business Income Manual which states that gambling doesn’t constitute trading and therefore can remain tax-free.
Will Your Bingo Winnings Ever Be Taxed?
Where there is a bit of a grey area is when it comes to things like inheritance tax. Bingo can of course payout life changing sums of money and if the unfortunate case arose in which you were to pass away, any money you left for other people would be liable for tax.
If your estate ends up to be worth more than £325,000, then you, or the people who will inherit your winnings, will be looking at 40% in tax.
Equally, if you decide to use any winnings to invest, you will have to pay capital gains tax of 18% should your winnings provide income through those investments, so it really isn’t as simple as picking up your winnings tax free and then never having to pay anything to the taxman.
Many people who have received large sums of money through winning on the likes of bingo or the National Lottery start thinking about what to do with their money early. There are options to ensure you lose as little as possible through tax, with the likes of trusts or giving away money to people earlier and it is worth speaking with a financial advisor to help choose the best option for you.
Therefore, while there is no need to worry about having to pay tax on any winnings you enjoy through gambling, if it’s a big win you may eventually have to pay some out one way or another.