Professional Gambler & Income Tax

MartianMan

unfortunately this is just hypothetical, and does not apply to me!

If someone was a professional gambler i.e. they made a *living* from betting on horse races, and the profits they made from simply betting on horses was their only income; would this "profit" be liable for income tax (or any other tax?)

afaik, all betting wins (from horse racing anyhow) in the uk are not liable for any income tax (not matter how large - I think).

Johnmb

You pay the tax on the stake, so you don't have to pay on the winnings. It doesn't matter whether it is your only source of income of not.

MartianMan

Out of curiosity, what is the current betting tax?

What would happen if someone places a bet with high-street bookmakers in the North? afaik, there is no betting tax there.

Or what would happen if someone resident here is placing bets with one of the online bookmakers - is betting tax owed?

Cyrus

no tax online atm, www.paddypower.com

Victor

There are two scenarios:

The average punter on the street who might make a few hundred or a few thousand a year (or just as easily loose) is only subject to betting tax.

The professional gambler who derives his main income from gambling (considered a trade not a profession). While he can write off his losses, he will have to pay income tax.

One wonders if he can write off the hard drinking as a business expense ....

Johnmb

Just to point out that you would only be considered a professional gambler if you acted like a bookies. If you simply place bets in a bookies (i.e. not providing your own odds, etc.), then you would not be considered a professional gambler, regardless as to how much money it involves, or how many hours you are there.

MartianMan

Victor
The professional gambler who derives his main income from gambling (considered a trade not a profession). While he can write off his losses, he will have to pay income tax.

When you say "professional gambler" do you mean someone acting in the sense of a bookmaker? - Not someone who makes their living from placing bets *with* bookmakers (and winning more times than losing)?

I would be surprised if Revenue would charge income tax to professional gamblers (those placing bets with bookmakers, and not providing their own odds etc) as presumably the Revenue would then also have to give an allowance on losses.

And this wouldn't be good as obviously most people make losses, and therefore I guess they would be able to write these off.

Imposter

Originally posted by MartianMan
And this wouldn't be good as obviously most people make losses, and therefore I guess they would be able to write these off.

But if someone was a professional gambler one would hope they were making money rather than losing it!

spudulike

This is a great conversation but with all this talk about making a living from gambling could someone please tell me exactly how to go about making a living from gambling????

MartianMan

Imposter
But if someone was a professional gambler one would hope they were making money rather than losing it!

What I mean is, overall more people lose a lot more than they win. If the Revenue were to start charging income tax to those who made money from betting on horse races, then I would have thought they would also have to allow all those people who lose money to write this off against their tax bill.

If they were to do this the Revenue would lose more money than they would gain from charging income tax to a very small group of people.

Imposter

Originally posted by MartianMan
Imposter
But if someone was a professional gambler one would hope they were making money rather than losing it!

What I mean is, overall more people lose a lot more than they win. If the Revenue were to start charging income tax to those who made money from betting on horse races, then I would have thought they would also have to allow all those people who lose money to write this off against their tax bill.

If they were to do this the Revenue would lose more money than they would gain from charging income tax to a very small group of people.

I know what you meant. I was trying to be funny! Must use more smilies!:(

MartianMan

Oh - Ok - Sorry about that!

Not quite awake yet...

Victor

Originally posted by MartianMan
When you say "professional gambler" do you mean someone acting in the sense of a bookmaker? - Not someone who makes their living from placing bets *with* bookmakers (and winning more times than losing)?

I'm sure they will use similar rules to when a builder (paying 20% CGT) becomes a property developer (paying 42% income tax) on development projects.

MartianMan

What's the difference between a builder and a property developer?

(Sounds like a joke, but it's not meant to be!)

I didn't know there was a difference; or that a "builder" is charged at a lower rate than a "property developer".

Why is this?

Makaveli

The current betting tax is 3c per €1.

MartianMan

afaik there is no betting tax in the uk. It used to be 10%, but I believe it was abolished.

As far as I know in the uk winnings made by professional gamblers are not taxable and do not constitute a trade for tax purposes. By “professional gamblers” I mean those who place bets with bookmakers (not bookmakers themselves, or those who provide tipping services etc).

As far as I'm aware, this is well established and derives from the 1925 case of Graham v Green where a person lived by winning on horses, was assessed for tax but won on appeal.

A similar case is Down v Compston in 1937 where a golf pro bet regularly on games in which he played. It was held that his winnings were not taxable, again on appeal.

Some have suggested that the courts which made these decisions did so on the pragmatic ground that most gamblers lose, and that therefore to tax winners would require that losers could claim the losses.

Of course, the overall amount lost (by punters) far exceeds that which is won!

So, if Revenue here could possibly charge income tax on winnings, I wonder if in theory it would be possible for losing punters to claim their losses??

It looks as if, if someone were a pro-gambler they would be better off being resident in the uk!

Victor

My image of the Professional Gambler would be the very large race horse owners (Magnier?) and the like. It also operates to prevent criminals using it to launder money, by claiming to have one lots of times and not lost (well not without the government getting a cut).

Originally posted by MartianMan
What's the difference between a builder and a property developer?

A builder may literally only build for other people. However, a property developer will provide his own site(s). There is a narrow case of a builder being a property developer where, once in a blue moon he buys and develops a site.