for UK residents are winnings on Betfair subject to income tax??

You won't because they're not

Hi Alex its been a few years, hope you are well and winning.

Sorry to hear that Alex, I know its been a struggle, I'm fúcked so I just make the best of it. In my case its just crippling arthritis, so not life threatening, but a fúcker non the less.

Alex, I have to go, after another sleepless night,  uisce beatha -whiskey,  has finally taken effect and I'm off to bed, good luck.

Joel already told you

** profits on    ** are

If profits on Betfair were taxable then you would also be allowed to claim your losses as tax deductible expenses.  I would doubt that the HMRC would want to allow people to do that, so I would doubt that Betfair profits would be taxable.

If profits on Betfair were taxable then you would also be allowed to claim your losses as tax deductible expenses.  I would doubt that the HMRC would want to allow people to do that, so I would doubt that Betfair profits would be taxable.

It's often suggested that if the UK government were to make gambling income taxable then as a direct result gambling losses could also be set against the tax due on all income. I fail to see why that would necessarily be the case?

Based on my very limited understanding of the US tax system, it appears that most gambling income is taxable but gambling losses can only be deducted up to the level of declared gambling income.

I am aware that the UK and the US currently have very different tax systems. Despite that, I suspect that if the UK government were to spend the time and money altering the system to make gambling income taxable they wouldn't neglect to restrict the amount of gambling losses that could be set against other taxable income.

I have no wish to see the introduction of a tax on gambling income but I'm not at all convinced by the argument that it couldn't/wouldn't be introduced simply because, as it stands, gambling losses could then be set against other taxable income.

The following document is well worth reading for any of you with any doubt, it relates to horseracing but does go into the tax situation, so a must read for any sports gambler. I will copy and paste a section but best to read full document in order to get context:

http://corporate.betfair.com/sitecore/content/B/Betfair/Homepage/media/press-releases/2010/~/media/Files/B/Betfair/pdf/Racing-Submission-to-HBLB-Consultation-Exercise.pdf

5.2 With regard to the tax treatment of betting exchange customers, HM Treasury
considered that this raised two issues:
First, whether it “should tax persons who lay bets on betting exchanges on the
grounds that they are bookmakers”. HM Treasury decided that “taxing layers on
exchanges, purely on the basis that they lay bets, would not be fair or proportionate”
and it explained this on the following basis: ”Whilst tax law does limit tax liabilities
for bookmakers to their gross profits from lay bets, it does not link being a
bookmaker to laying a bet. Instead it defines a bookmaker as someone who receives
or negotiates bets by way of business. For bookmakers, it is clear that laying bets is
a business activity, in the sense that it is carried out for the purposes of a trade and
has an inbuilt system of profit. This is not generally true for layers on exchanges who
are not conducting a trade, nor are they generally able to build in a profit margin to
their price. The decision not to tax layers on exchanges is also consistent with social
policy set out in the Gambling Act. I should stress that bookmakers are already liable
for duty on their gross profits from lay bets on exchanges, and HMRC will continue to
ensure compliance with this.”
Second, as to “whether there are persons who are in business on the betting
exchanges more generally and whether these people should be taxed as
bookmakers.”
HM Treasury stated:
“We have looked more widely at whether there is a group of users on betting
exchanges who are acting by way of business and are not currently being taxed.
Whilst there are clearly differing levels of activity on exchanges and some users do
bet in high volumes, there is not sufficient evidence to characterise these users as
running a business, as opposed to merely being high-volume gamblers, who have
traditionally been outside the tax net.”


Betfair is the bookmaker, and as such "negotiates" all trades.  We as users, whether profitable overall or not, do not create a trade as betfair pays the taxes from their advantage of negotiating the bet (they create the trade) and are thus paid through their commission and prem charges etc...

Yep, this is the critical part:

“We have looked more widely at whether there is a group of users on betting
exchanges who are acting by way of business and are not currently being taxed.
Whilst there are clearly differing levels of activity on exchanges and some users do
bet in high volumes, there is not sufficient evidence to characterise these users as
running a business, as opposed to merely being high-volume gamblers, who have
traditionally been outside the tax net.”


iirc that dates back to about 1993.

Getafix compare the relative sophistication of that document to this idiotic statement made by an FBI agent according to the link below:

"this investigation has determined that Ivan Mindlin directs William Thurman Walters on the placing of what are believed to be layoff’ bets for the ‘Computer’ group. Walters operates a large bookmaking operation which be uses to place bets on desired games..."

This allegation was the keystone of special agent Noble’s investigation. Layoff bets, by definition, are made exclusively by bookmakers wishing to protect themselves against large losses by making bets with other bookmakers.

Only bookmakers lay according to the FBI, a bit like the British bookies saying layers should be taxed.
http://www.offshore****/images/COMPUTER.htm

By: Alex the old wrinkled retainer
Date Joined: 07 Aug 06 Add contact | Send message
When: 03 Feb 12 09:43 Joined: Date Joined: 07 Aug 06 | Topic/replies: 19,274 | Blogger: Alex the old wrinkled retainer's blog

Feb 3, 2012 -- 9:02AM, DOUBLED wrote:

Please ignore the rubbish from Alex - Betfair winnings by an individual are not subject to income tax - end of


Are you a tax expert please?

Not a tax expert - just know the law - thanks for your interest

As I have said to you many times before - please post details of an individual that has been made to pay income tax on his Betfair winnings - thanks in anticipation

tick tock ....tick tock...tick tock... zzzzzzzzzzzzzzzzzzzzzz

come up with any examples yet ?

tick tock........tick tock..........tick tock...........zzzzzzzzzzzzzzzzzzzzzzzzz

The name of the individual paying income tax is..................



Tick tock...Tick tock...Tick tock.............

dim

betfair  does

That clock will continue to tick Doubled, as you are indeed correct

Thanks for the link Investor, very interesting so far... quite a lot to read so will get back to.

Just to try and clear things up, as far as I understand it, if betting was taxable it would fall under Capital Gains Tax NOT Income Tax for the sole reason you make the bet and possibly get a capital gain on bet completion.  There is thus, no need to declare betting profits to hmrc in your self assessments because according to them (http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm):


Exempt assets - when you don't pay Capital Gains Tax

Some assets aren't liable to Capital Gains Tax at all because they’re exempt. These include:
• your car
• personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
• stocks and shares you hold in tax-free investment savings accounts, such as ISAs and PEPs
• UK Government or 'gilt-edged' securities, for example, National Savings Certificates, Premium Bonds and loan stock issued by the Treasury
• betting, lottery or pools winnings
...

The grey area imo, is when somebody is betting for a living as per my last posts... this may be thought of as Income Taxable, however the difficulty here is what the difference between a high volume bettor and a "make a living" bettor is.  For example, somebody who has saved say £100k in their normal job (paid taxes on) and wants to take off a few years from their job, may for example win another £500k over the course of say 5 years sports betting... they have not made this money for a living - they could be considered just a high volume gambler, just betting like everybody else; bit of a grey area.  However, the study by the inland revenue on whether overall exchange winners should be taxed (Dec 2005) said "there is not sufficient evidence to characterise these users as
running a business". If they had decided they had wanted to tax the overall winners, they would I am sure, request data from betfair to identify such users using met criteria.  What do others think?

I have not read anywhere where somebody has been prosecuted for not paying betting taxes (in the uk) since the betting tax was abolised.  Maybe somebody else has?  If so, please tell and provide proof - news story link etc...?