Do Professional Gamblers Pay Tax in the UK?

Where this question comes from

Everyone knows UK gambling winnings are not taxed. The follow-up is always the same: what if you do it for a living? The assumption is that at some point volume, skill or dependence must turn a hobby into a trade, and HMRC must be waiting at that line.

The answer is close to no, and it has been close to no for a hundred years. But close to no is not the same as no, and the difference is worth understanding properly rather than repeating a slogan.

Graham v Green, and the sentence the law still rests on

The leading authority is Graham v Green [1925] 9 TC 309. The taxpayer's sole means of livelihood came from backing horses at starting prices - a full-time gambler by any ordinary description, with no other income at all.

He was held not to be trading. Rowlatt J put the reason in a line that has outlived every statute passed since: a bet is merely an irrational agreement that one person should pay another person on the happening of an event.

The point is that a bet has no trading substance to it. A trade involves supplying something - goods, a service, a skill exercised for a customer. A bet supplies nothing. You can repeat it a thousand times, live entirely on it, and it is still a thousand irrational agreements rather than a business.

What HMRC's own manual says

HMRC sets out the position in its Business Income Manual. The basic position at BIM22015 is that betting and gambling as such do not constitute trading, and BIM22017 deals specifically with the professional gambler.

The practical consequence runs both ways, and the second half is the one people forget. If your winnings are not taxable income, your losses are not deductible either. There is no relief to claim, no loss to carry forward, and no such thing as a gambling tax refund in the UK - a phrase people search for regularly and which describes something that does not exist here.

Where the line actually is: organised activity

There is a real boundary, and it is not about how much you win. BIM22018 addresses organised activity, and the distinction it draws is between betting against the market and running an operation that profits from the gambling public.

A bookmaker is trading. So is someone running a betting syndicate as a commercial operation, or selling tips, or operating a service that other gamblers pay for. In each case there is a customer and something supplied. The activity has stopped being a bet and become a business that happens to involve betting.

BIM22019 covers a related case: gambling that forms an element of an existing trade. A bookmaker's own bets are not insulated from tax merely because they are bets.

So the question is not how professional you are. It is whether anyone is paying you for something.

Spread betting

Spread betting sits in the same place despite looking like a financial product. HMRC's position is that someone placing a spread bet is not normally carrying on a trade, is not taxable on the profits, and receives no relief for the losses.

The symmetry is the thing to note: the treatment that keeps winnings out of tax also keeps losses out of relief, and for most people over time that is not the bargain it first appears.

What this means for you

If you gamble, however seriously and however successfully, you are almost certainly not trading and your winnings are not taxable. Poker included: skill in a game does not convert a bet into a trade, because the bet still supplies nothing to anyone.

If you have started selling tips, running a syndicate for others, or taking money from other gamblers in any form, you may well have crossed into trading - and that is a conversation with an accountant rather than with a comparison site.