Gambling winnings in the UK aren’t taxable, which leaves the impression that they aren’t considered to be ‘earnings’ in the traditional sense of the word by authorities.
However, that won’t stop the Department for Work and Pensions (DWP) from decreasing – or even halting altogether – the Universal Credit payments of punters that win a decent amount.
The government department has confirmed that winnings from sports bets or casino gaming would now contribute to an individual’s ‘capital allowance’ – and that wins of £6,000 or more could see benefits slashed or even stopped.
Capital Gains
The DWP has reiterated that gambling winnings aren’t considered to be earnings. However, they do fall under the remit of ‘capital’ – and that is what can see a Universal Credit calculation altered.
A spokesperson from the department told The Mirror that ‘winnings obtained from gambling activity do not meet the definition of earnings within Universal Credit Regulation 52 and are not taken into account as an unearned income.’
That said, there’s a dim view taken on those who are successful in their hobby.
“Any profit made from gambling activity will be considered within Universal Credit as part of a person’s capital,” the spokesperson continued.
According to the government’s own description, capital is ‘any income from savings, assets and investments,’ although there’s no mention of gambling winnings specifically – unless, of course, they fall under the somewhat generic heading of ‘investments’.
Punters who creep over the £6,000 bottom threshold could see their Universal Credit cut by £4.35 per month, with additional payments of £4.35 for every £250 that the individual has over their capital allowance.
To make matters worse, it is the individual’s duty to report to the authority when they have won a big bet or casino jackpot that takes them over the capital threshold.
The DWP has confirmed that benefits will not be cut as soon as the individual’s capital falls below the £6,000 ceiling again.
The department also covers their tracks with a caveat called ‘unearned income’, under which gambling winnings could technically fall. Universal Credit payments can be cut where the individual reports unearned income in their returns.
In an era of affordability checks and monitoring from bookmakers, it’s another blow to punters simply wanting to have a flutter as and when they want.
There’s a warning too: punters should not use betting as a way of getting their capital holdings below £6,000. This is known as ‘deprivation of capital’, where an individual ‘knowingly reduces their savings and other capital to get or increase their Universal Credit payments.’
The DWP has the power to decide if the spending that took the individual below £6,000 is ‘reasonable in the circumstances of their case.’ Gambling, of course, would not satisfy this requirement.
Keeping Tabs
If you thought the depth and scale of affordability checks performed by the bookmakers was invasive, wait until you hear what powers the DWP have to monitor your betting.
They can remotely gain access to your accounts at online betting sites to monitor your spending, as well as tracking your transactions at payment providers like PayPal too.
The department can access credit reports as well, upon which ‘applications’ to join a betting site – which happens every time you open a new account – are detailed.
And if they still aren’t happy, the DWP can even ask you to provide bank statements where there’s any doubt about the size of your capital holdings. If you’re regularly withdrawing winnings from your betting accounts back into your bank, it will likely fall under the auspices of ‘unearned income’ as detailed above.
Although there’s no tax on gambling winnings in the UK, the DWP can also inform HMRC if it suspects you have been turning a profit from your punting – tax is payable on the interest accrued from gambling winnings.
So, if you won the lottery or landed a sizable accumulator bet, you would be required to declare this to HMRC if the winnings were subsequently transferred into your UK bank account, at which time it would begin to accrue interest.
Gambling, as per the government’s definition, is wagering on ‘…the outcome of a race, competition or other event or process, the likelihood of anything occurring or not occurring or whether anything is or is not true.’
Rules are rules, and it’s best to work with them – rather than trying to circumnavigate them. But how many punters are unaware of how a large winning bet can impact them in other areas financially?