{"id":763,"date":"2019-07-09T16:13:05","date_gmt":"2019-07-09T15:13:05","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=763"},"modified":"2026-02-02T17:14:06","modified_gmt":"2026-02-02T17:14:06","slug":"tax-on-lottery-winnings","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/tax-on-lottery-winnings\/","title":{"rendered":"Do you need to pay tax on lottery winnings?"},"content":{"rendered":"\n<p>Good question. If you&#8217;re wondering if you have to pay tax on lottery winnings then guess what, you&#8217;ve come to the right place! While lottery winnings aren&#8217;t taxable, you may be subject to taxes once you&#8217;ve deposited the funds or if you give any winnings as a gift. Let&#8217;s get into it.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-orange m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Hey, have you sorted your tax return yet?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p><span class=\"notion-enable-hover\" data-token-index=\"0\">Avoid costly mistakes and let Taxfix take care of it for you. Our UK-accredited accountants make filing quick and stress-free, starting from just \u00a3119.<\/span><\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a data-js=\"openAuth\" data-location=\"\" data-view=\"signup\" href=\"https:\/\/taxfix.com\/en-uk\/assessment\/signup\" class=\"gtm-get-started-button c-button  m-large\" onClick=\"javascript:setVariant('taxReturn');\">Start<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Is the lottery tax free?<\/strong><\/h2>\n\n\n\n<p>The simple answer is yes. Phew, that was easy. If you&#8217;re a UK tax resident, you&#8217;re exempt from paying the following taxes on your lottery winnings:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/capital-gains-tax-cgt\/\">Capital Gains Tax<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/income-tax\/\">Income Tax<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/national-insurance\/\">National Insurance<\/a><\/li>\n<\/ul>\n\n\n\n<p>Rather than an income, participating in the lottery counts as gambling in the UK according to HMRC. So if you&#8217;re lucky enough to win, rest assured that your winnings are tax-free. It doesn&#8217;t matter how much you win or what game you play, you&#8217;ll be set for life! <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Tax on deposited funds<\/strong><\/h2>\n\n\n\n<p>Although you don&#8217;t have to pay taxes on your lottery winnings, there are a number of things to keep in mind once the money has been sent to you. If your money is earning interest in the bank, you&#8217;ll be charged Income Tax on the<a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/tax-rate-savings-interest\/\"> interest from your savings<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is Income Tax?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/ttQypqUVjQs?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>You&#8217;ll also have to pay Income Tax on any investments you make with the money that earn you an income. For example, let\u2019s say you purchase a buy-to-let property with your lottery winnings and now you\u2019re earning rent. You&#8217;ll have to pay Income Tax on your rent earnings if you make more than \u00a312,570 in overall earnings in one tax year, whether it\u2019s from rent, your job, or any other stream of income. This threshold is known as the <a href=\"https:\/\/www.gov.uk\/income-tax-rates\">Personal Allowance<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Lottery winnings and Inheritance Tax<\/strong><\/h2>\n\n\n\n<p>If you win the lottery, the money you win becomes part of your estate. That means that if you pass away, whoever inherits your estate will have to pay <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/inheritance-tax-iht\/\">Inheritance Tax <\/a>(IHT) on it. Money, property, and assets can all make up your estate.<\/p>\n\n\n\n<p>Inheritance Tax is currently taxed at an incredibly high rate of 40%. However, you&#8217;re only taxed on anything over the \u00a3325,000 threshold. This threshold is known as the <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/inheritance-tax-iht-allowance\/\">Inheritance Tax Allowance<\/a>.<\/p>\n\n\n\n<p>This means that if your estate&#8217;s value is lower than this amount, whoever inherits it won&#8217;t need to pay tax on it. However, they&#8217;ll still need to declare it to HMRC.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-nude m-align-center\">\n    <div class=\"b-block-body\">\n        <h5>Your spouse or civil partner doesn\u2019t have to pay Inheritance Tax on anything you leave them, but your children or other family members and friends will.<\/h5>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Lottery winnings and Gift Tax<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.gov.uk\/inheritance-tax\/gifts\">Gifts from winnings are subject to IHT<\/a>. If you would like to gift some of your lottery winnings to others but don\u2019t want to pay Inheritance Tax on it, you\u2019ll have to give the gift:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>More than 7 years before you die<\/li>\n\n\n\n<li>To your spouse or civil partner&nbsp;<\/li>\n\n\n\n<li>Within your annual allowance of \u00a33,000<\/li>\n<\/ul>\n\n\n\n<p>Annual allowance? Yep, you can only gift up to \u00a33,000 every tax year without being taxed IHT. The good news is, you can carry over one year\u2019s allowance to the next tax year, but only up to a maximum of \u00a36,000.&nbsp;<\/p>\n\n\n\n<p>If you die within 7 years of giving a gift, HMRC use something called a sliding scale to calculate how much tax the person who inherited your estate or received a part of it as a gift, would pay.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table aligncenter\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Number of years between giving the gift and you passing away<\/td><td class=\"has-text-align-center\" data-align=\"center\">Rate of Inheritance Tax to be paid<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">0-3<\/td><td class=\"has-text-align-center\" data-align=\"center\">40%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3-4<\/td><td class=\"has-text-align-center\" data-align=\"center\">32%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">4-5<\/td><td class=\"has-text-align-center\" data-align=\"center\">24%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">5-6<\/td><td class=\"has-text-align-center\" data-align=\"center\">16%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">6-7<\/td><td class=\"has-text-align-center\" data-align=\"center\">8%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">7+<\/td><td class=\"has-text-align-center\" data-align=\"center\">0%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Other tax free gifts<\/strong><\/h2>\n\n\n\n<p>You can give up to \u00a3250 per tax year to anyone without them being subject to IHT. As long as they didn\u2019t receive any gifts from your annual \u00a33,000 allowance then this gift is tax-free.&nbsp;<\/p>\n\n\n\n<p>Ever wish that when you got married, someone would\u2019ve gifted you lots and lots of money instead of the useless toaster you now have 2 of? Be thankful for the toasters because, shockingly, not all wedding gifts are tax-free. If the gift fits a certain criteria then it isn\u2019t taxable, which is great, but if you received more than \u00a31,000 as a gift, you have to pay IHT. Not hating that tax-free toaster so much now, eh?<\/p>\n\n\n\n<p>&nbsp;Wedding gifts can be tax-free if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>They\u2019re given before the wedding<\/li>\n\n\n\n<li>There\u2019s proof the marriage went ahead<\/li>\n\n\n\n<li>The gift is up to \u00a35,000 for a child<\/li>\n\n\n\n<li>It\u2019s up to \u00a32,500 to a grandchild or great-grandchild<\/li>\n\n\n\n<li>It\u2019s up to \u00a31,000 for anyone else<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Good question. If you&#8217;re wondering if you have to pay tax on lottery winnings then guess what, you&#8217;ve come to the right place! While lottery winnings aren&#8217;t taxable, you may be subject to taxes once you&#8217;ve deposited the funds or if you give any winnings as a gift. Let&#8217;s get into it. Is the lottery [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[430,427],"tags":[348,420],"class_list":["post-763","post","type-post","status-publish","format-standard","hentry","category-gifts-winnings-and-inheritance","category-the-tax-basics","tag-income-tax","tag-pensions-savings-winnings"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Do you need to pay tax on lottery winnings? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"You might be curious if lottery winnings are subject to taxation. 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