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Betting in the UK is taxed on the company level so the bettor doesn't have to pay taxes on his winnings. I have a company in the UK whose only objective is to trade on sports betting. Will I have to pay the 21% tax rate on net income if all income is derived from betting?

  • thanks for all the replies. Silverfish made a good point, and that argument is used by people who make a living of gambling. My company would just make straight bets, like a punter, so the income doesn't come from a taxable source and the taxpayer is not by any means involved in the organisation of the activity. It's a complicated issue but i think in the end this income "or winnings" are not taxable at the company level also. So in the end i would just have to pay taxes when getting the money out of the company (dividends with no tax credit, salary, etc.) Very good answer Silverfish, thanks – user32208 Aug 13 '15 at 7:52
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The principle here seems to be that just betting itself is not taxable. From BIM22015

The basic position is that betting and gambling, as such, do not constitute trading

However,

An organised activity to make profits out of the gambling public will normally amount to trading.

The idea seems to be that being a bookmaker is taxable, but just making bets is not. BIM22017 going into it a bit more:

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.

BIM22018 goes into detail on the other side, talking those who are taxable:

An organised activity to make profits out of the gambling public will normally amount to trading. An example of this is the bookmaker.

... The key feature is that the taxpayer is likely to be involved in the organisation of the activity. They are not mere punters. They are carrying on an activity where the odds are in their favour.

The links prove further information, but the theme seems to be that acting as a bookmaker would be trading income, which is taxable, but acting like a punter, even one with a system, would not be. It's not clear from your description which applies. You may need further advice on the tax treatment that is appropriate. Also follow each of the links for further information. BIM22015 provides links to the most relevant information.

Note, it isn't true that all income is taxable, regardless of source. BIM15035 talks about this. It specifies that for something to be taxable income, it must come from a taxable source.

If, for example, a taxpayer is a trader that does not mean that any non-capital receipt he or she gets is chargeable as trading income. It must also be a receipt forming part of the profits of the trade, which is the taxable ‘source’

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The company will have to pay 20% tax on its profits. Doesn't matter how these profits are earned. Profits = Income minus all money you spend to get the income.

However, you can't just take the profits out of the company. The company can pay you a salary, on which income tax, national insurance, and employer's national insurance have to be paid at the usual rate. The company can pay you a dividend, on which tax has to be paid. And the company can pay money into the director's pension fund, which is tax free.

Since the amount of company revenue can be of interest, I'd be curious myself what the revenue of such a company would be. And if the company makes losses, I'm sure HMRC won't allow you to get any tax advantages from such losses.

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Yes, at that stage income is income regardless of source.

Assuming you're talking about overall profit, not just the individual wins when gambling.

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