When I turned pro last year I first consulted the Citizen’s Advice Bureau and was told that Poker was exempt from tax because it is a game of chance (as per your post).
However, I also spoke to a friend who is an accountant and from his knowledge of the general principles of tax law, he doubted that this would be the case where poker is your main, or sole source of income. He urged me strongly to consult a tax inspector at my local Inland Revenue office. Whilst chatting to the taxman is hardly amongst my favorite pastimes, I decided to play it safe and phone my local office (possibly a mistake, but then I always was too honest for my own good).
In deference to my accountant friend, I was told I had to register as self-employed, and that I was required to pay both income tax and national insurance (but not VAT) on my earnings because poker was my main source of income. There is something of a grey area as to at which point you become required to pay tax. I was unable to get a definitive answer from the tax office on this point, but essentially it comes down to the amount of time you spend at the activity. If you are full-time employed in another occupation and manage to win big in a tournament in your spare time, that income is tax free. If however, you spend the majority of your time earning income from poker then you have to pay up. It may be possible to balance playing poker part-time alongside another occupation and avoid taxation on your poker earnings. Each case is examined separately.
The upside of all this is that you can claim expenses for that trip to Vegas, for your poker books/subscriptions, for your TV, broadband connection, computer, etc.
A secondary issue is whether as a poker player you are required to pay tax on winnings from other forms of gambling activity (e.g. other casino games, a bet on the horses etc). My accountant spoke to the Inland Revenue to clarify this and was initially told that I had to pay tax on all forms of gambling. However, he believes this is wrong and has written formally to the taxman to argue that I am ‘a professional poker player’ and not ‘a professional gambler’. We are awaiting a reply. The last thing I want to have to do is account for every time I play a fruit machine down my local (although it would mean in practice I would lose less).Statistics: Posted by Chopstix — Wed Feb 15, 2006 12:14 pm
]]>