Do I Need to Pay Taxes on Lottery or Scratch Card Winnings in the UK?

Players are often curious about what the tax implications are on winnings if they win the jackpot. We all dream of winning the lottery or taking home a huge jackpot from an online casino, such as the Health Games’ five mega jackpots with a minimum of £500,000.

However, if the odds come up in our favour and we win that sweet prize, would the HMRC want a bite out of our winnings?

The short answer is no - if you play the lottery in the UK there is no tax liability on any winnings.

Unlike many countries where lottery winnings are of interest to the taxman, in the UK the winner takes it all. Players wishing to play the lottery or scratch cards can do so without worry of taxation of their winnings.

Instead of charging the player a tax on their winnings, the UK Government takes a slice instead from the industry, called a "point of consumption tax".

It was not always this way. In the late 1990s, the "Godfather of Gambling" Victor Chandler thumbed his nose at Gordon Brown and took his gambling empire to Gibraltar. This move allowed his customers to play without having to pay the necessary 9% tax on their winnings. This forced the Chancellor to change the law on gambling and tax in the UK.

Ever since the introduction of the National Lottery in 1994, people love to play, and whether it is the lottery or scratch cards, the lottery is the number one choice for many people in the UK.

Players are not required to pay tax on lottery or scratch card winnings

Because of its popularity and rapid growth, partially inspired by the fact that players can now buy lotto online, profits have soared. The regulations have needed to become stricter to protect the public from unscrupulous organisations.

Any gambling activity requires a licence, and for-profit gambling companies are charged a 15% tax on all profits, payable to the Government, (soon to be rising to 21% in October 2019). Despite these high taxes, the industry continues to grow because of a loyal player base and constant innovation. It is also a vital industry for the Government, providing crucial funding for public services such as health and education, and public projects including roads and housing. The gambling industry is also vital to the economy, providing not just entertainment, but employment for people with a variety of skills.

Providers of lottery tickets or scratch cards are subject to strict regulations

The gambling industry is heavily regulated and accountable. It is also extremely dedicated to protecting its players, contributing essential funding into initiatives to prevent problem-gambling.

The relationship with the industry's watchdog, the Gambling Commission, ensures the provision of a well-regulated space for all areas of gambling, including online casino games and other games such as lotteries and scratch cards.

Charity lottery providers are a crucial fundraising tool. They provide lottery or scratch cards that raise money for good causes and are subject to the same strict rules and regulations as for-profit gambling organisations, although they are not subject to the same taxation. 

For the players, regardless of how much is won from the lottery or scratch cards, whether it is £10 or £1 million, there is no requirement to put this amount on your tax return.

Bear in mind that expensive purchases may be subject to fraud or anti-money laundering checks. It is therefore wise to keep records of winnings. Players who bet with licenced providers will have no difficulties explaining where the money originated!

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