Is Matched Betting Tax Free? Everything You Need To Know

In a word, yes.

For tax purposes, Matched Betting is considered a form of gambling, which is tax free for the consumer. Unlike in some other countries such as the USA, where gamblers and lottery winners will have to set aside a large chunk of their winnings for tax, UK customers who win big get to keep the lot.

We’ll break down why this is and how it works in this article, but please do remember that we’re not financial advisors. If you need specialised, professional advice, please speak to a professional financial advisor who can give you the guidance you need.

So, Does That Mean Matched Betting Is Gambling?

Definitely not! Gambling, by definition, is an activity involving risk or chance.

No matter how convinced a punter may be that a particular horse is a sure thing, when they place a non-matched bet on that horse, they are taking the risk that their bet will lose, and that they will come away with nothing.

Gamblers may use betting strategies to minimise their risk, but that doesn’t change the fact that the risk is still there.

A matched bettor is able to calculate in advance exactly how much they will make from a bet, no matter the outcome - this is the beauty of Matched Betting. As the element of risk is removed, Matched Betting cannot logically be considered a form of gambling.

The government and HMRC, however, don’t take into account this distinction when writing tax law, which is to our advantage. Because we are still placing bets with bookmakers, and the number of matched bettors is too small to have their own dedicated category, Matched Betting is grouped along with gambling for tax purposes.

All of the profits, none of the risk, and none of the tax? It’s easy to see why Matched Betting is growing in popularity as one of the UK’s best side hustles.

Most side hustles are considered self-employment. You have to submit a tax return if you’re earning over £1000, and pay normal tax rates if your total earnings come to over the current personal tax allowance of £12,750 a year.

Meanwhile, if you dip your toes into any sort of investment, your profits are subject to capital gains tax. But there’s no limit to the tax-free profits you can make Matched Betting!

If you’re new to Matched Betting, or feeling overwhelmed by all the information out there, why not give our free trial a go? We’ll take you step by step through the process, allowing you to make your first £60 of profit completely free.

Why Is Gambling Tax Free?

It comes as a surprise to a lot of people that gambling winnings aren’t taxed. After all, if someone manages to win the Euromillions, you’d think the government would be keen to take a percentage.

The reason for this is the simple fact that gamblers almost always make a loss. For all the big wins they might be lucky enough to get, there will be bigger losses to cancel them out - and naturally you can’t possibly be taxed on your losses.

In countries where gambling is taxed, like the USA, gamblers offset their losses against their wins when submitting their tax returns, but this means the average punter has to keep meticulous records, and it takes thousands of extra hours for the American IRS to administrate.

Until 2001, a tax of 9% was charged to punters either on stakes or on winnings in high street bettings shops (before online bookies really got going), but this was abolished by Gordon Brown, and replaced with a 15% tax on bookmakers instead.

This does mean that the odds you see on a bookie’s website are calculated to take into account the taxes the bookie has to pay, and so result in a little less profit than you might otherwise make as a matched bettor. Nonetheless, this is a much easier and more profitable system for the consumer than having to submit a tax return every year!

The Finer Points

What if I make a living from Matched Betting?

For those who know their tax law, they’ll be aware that there comes a point when individual profitable activity starts to be considered a ‘trade’ - i.e. a professional outfit that should be subject to tax.

If people go as far as to make their full time living from Matched Betting (or even from normal gambling), they often wonder if their profits might start to count as a trade. After all, pretty much everybody has to pay income tax, and if you’re Matched Betting full time, your profits are your income.

But the government has been pretty clear about this. Individual gambling activity, even if the individual manages to make enough money to live on, isn’t ever considered a trade. Professional poker players, for example, don’t have to pay any tax on their winnings, no matter how much they win. HMRC advise:

‘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.’

Source: HMRC Business Income Manual

The only things they might have to pay tax on are other services they offer - for example, if they get paid to give talks on their career and strategy, they’d have to declare the fees and potentially pay tax on those.

Can I attract suspicion?

One other thing you may need to consider if you start making extremely large profits from your Matched Betting is the suspicion of money laundering.

Obviously, what you’re doing as a matched bettor is perfectly legitimate, but gambling is a common way for organised criminals to launder their illegitimate gains. After all, it’s not particularly surprising for someone to withdraw large sums of money from an online bookie, and this is something criminals can take advantage of.

If banks start seeing regular large withdrawals from bookies to your account, it’s possible that they could become suspicious about your activity.

Fortunately, it’s easy enough to prove that you haven’t done anything wrong. We recommend keeping track of your profits no matter how much you’re making, using our handy profit tracker to help, or our free Matched Betting spreadsheet.

If you start making thousands a month, this becomes ever more important. So long as you’ve got records of all your Matched Betting activity, you can easily prove that what you’re doing is legal and legitimate, and you’ll never have to worry about being suspected of doing anything dodgy.

On a similar note, bookies may ask to see ID to prove you are who you say you are. It can be a bit alarming when you receive a ‘KYC’ request (short for ‘Know Your Customer’), but the documents requested should be easy to supply.

They’ll normally want to see some form of photo ID, to prove your identity and age, and proof of address. Our detailed breakdown takes you through everything you need to know about ID checks and why bookies sometimes require them.

Summary

In short, the average matched bettor making a few hundred a month from Matched Betting doesn’t have to give tax a second thought.

If your profits start to rise high enough to become a full time income, you still don’t have to pay any tax on them - but it’s a good idea to keep full records of your betting, just in case you have to demonstrate where your money’s coming from.