Do Professional Gamblers Pay Tax?

The following is a guest post written by Andy from UK Tax Planning, if you have any questions or comments regarding this post or anything to do with UK taxation then email Andy direct; Andy (at) uktaxplanning.com. "Last year I made 100,000GBP betting on the horses. Do I need to pay tax on this income?" This was a question I had emailed to me a couple of days ago and it provoked a good bit of research on my part because, in all honesty, I did not know the answer. My initial thinking was that the income would be taxable because it is his profession and he gambles with a system that is designed to create profit in the long run, however this proved not to be the case. Taken from the HMRC website:

The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade. The case of Graham v Green [1925] 9TC309 concerned a man whose sole means of livelihood came from betting on horses at starting prices. Rowlatt J says at pages 313 and 314: Now we come to betting, pure and simple… the man who bets with the bookmaker, and that is this case. These are mere bets. Each time he puts on his money, at whatever may be the starting price. I do not think he could be said to organise his effort in the same way as a bookmaker organises his. I do not think the subject matter from his point of view is susceptible of it. In effect all he is doing is just what a man does who is a skilful player at cards, who plays every day. He plays to- day and he plays to-morrow and he plays the next day and he is skilful on each of the three days, more skilful on the whole than the people with whom he plays, and he wins. But I do not think that you can find, in his case, any conception arising in which his individual operations can be said to be merged in the way that particular operations are merged in the conception of a trade. I think all you can say of that man ... is that he is addicted to betting. It is extremely difficult to express, but it seems to me that people would say he is addicted to betting, and could not say that his vocation is betting. The subject is involved in great difficulty of language, which I think represents great difficulty of thought. There is no tax on a habit. I do not think "habitual" or even "systematic" fully describes what is essential in the phrase "trade, adventure, profession or vocation". This shows that having expertise or being systematic ("studying form") is not enough to create a trade of being a "professional gambler".

So there it is. Merely having a system that you use to create profits from gambling does not constitute a trade in the eyes of HMRC and as such you are not required to declare this income on your self-assessment tax form. However if as a result of your professions as a gambler you receive any other income (from tipping services, guest appearances etc.) these would be subject to tax. Also even though you are not paying any income tax you might consider paying voluntary National Insurance contributions so that you can receive state pension when you retire. This is entirely your choice however.

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