Should UK and Irish Governments Turn Up the Tax on Lotteries?

In the UK and Ireland, lotteries are still immensely popular. While those run by Camelot in Wales, Scotland, England, and Northern Ireland have declined in recent years, the company still sees billions in ticket sales, while the Irish National Lottery continues to go strong through lotteries and scratch cards.

Despite being distinctly different countries, the UK and Ireland’s lottery set-ups are very, very similar in terms of taxation and how the monopolised lotto-runners operate. Both countries also laud multi-million lotto winners in the press, but with the current state of play of global and national economies, should more tax be placed on these games on chance?

How much tax do lottery winners pay in the UK and Ireland?

In Ireland, the lotto tax is non-existent. If you win the lottery, regardless of the size of the win, you get all of it without paying any tax at all. That said, if you then gift some money or leave it as inheritance, Gift Tax and Inheritance Tax may be applied to the recipient. Furthermore, money made from investments that were funded by the lottery winnings will also be taxed. This also counts for wins from betting on lotteries.

In the UK, it’s very much the same as in Ireland. Regardless of if you win £10 with a couple of matching numbers or sweep the jackpot, you won’t be taxed on your winnings. When you win, you get the lot and can do with it as you please. Of course, how you use the cash may then bring about tax implications. In both the UK and Ireland, what you win is what you get – it’s all very clear-cut.

See also  Car pulled from river after horrifying harbour plunge sparks frantic hunt for survivors

Now, bringing in a small tax rate on these winnings may not be as reviled as you may think. Slapping a US-style income tax requirement of some 37 percent would likely cause a civil revolt. However, a four or five percent tax rate may just be small enough to go unchallenged.

After all, a five percent tax on a win of £1 million would still leave £950,000. Under this, the £4.7 billion the National Lottery reported that it has paid in 2021 would yield £235 million under a mere five percent tax. They also say that 360 players became millionaires in 2021 via National Lottery games, so there’s been plenty to go around.

Keep the public on side and increase tax on the companies

A few years ago, the general public was made very aware of how the monopolised lottery companies in the UK and Ireland operate. Once perceived as national companies that operate to the benefit of the public, it turns out that both Premier Lotteries Ireland and Camelot are owned by the Ontario Teachers’ Pension Plan. In 2017, €84 million was paid in dividends to the owner’s shareholders, with the National Lottery being a driver of income.

Both National Lottery organisations lean heavily into their good causes, which they certainly fund by the bucket load. Some 30c from each €1 spent on Irish lottery games goes to good causes, amounting to around €4.2 million per week. In the UK, the 2020/21 year pumped out £1.9 billion to National Lottery projects, while the current rate of Lottery Duty – the taxation – pulled in £1 billion, and one percent was kept in profit.

See also  Great Britain: "Crown stamp" back on beer glass

Given that both are owned by a Canadian business, the natural line of thinking for increased lottery taxation would be to put it on the lottery-runners. However, given that a stated one percent remains as profit, it’s tough to see other outgoings like prizes or good cause funding not taking the hit. Then again, a 12 percent Lottery Duty is relatively small, and they’d have to keep big prizes to draw in punters.

Were the government to look to increasing lottery taxation, the logical thinking would be to tax those who run the games. Still, given the current climate and if the destination of the funds were clearly rationalised, perhaps big-money winners would be on board with ceding with a small percentage of a jackpot.

You May Also Like

About the Author: Tad Fisher

Prone to fits of apathy. Music specialist. Extreme food enthusiast. Amateur problem solver.

Leave a Reply

Your email address will not be published.