Rather than an income, participating in the lottery counts as gambling in the UK according to HMRC. If you’re a UK tax resident, you’re exempt from paying the following taxes on your lottery winnings: If you’re wondering if you have to pay tax on lottery winnings then guess what, you’ve come to the right place! While lottery winnings aren’t taxable, you may be subject to taxes once you’ve deposited the funds or if you give any winnings as a gift. Initially you get a £1,000 allowance per year where no tax is paid, but after that you’ll pay tax, and it can be fairly hefty.Good question. These are called dividends.Īnd you might have to pay tax on dividends. And when successful companies make lots of profit each year, they can give those profits back to their owners (called shareholders, the people who own the shares). When you invest and buy shares in companies, you buy ownership of those companies. Presuming that your winnings are making you a large income from interest every year, you’ll be a higher rate or additional rate taxpayer and so you’ll pay 20% in Capital Gains Tax on your profits when you sell investments in the future. It’s 10% if you are a basic rate taxpayer when it comes to your income (see above), or 20% if you are a higher rate or additional rate taxpayer. The rate you’ll pay is either 10% or 20%. When you begin selling those investments and making profit, you might have to pay tax. Typical investments are stocks and shares, which is where you own part of a company (a share of the company). You might have to pay tax on your profit.

This is where you buy something of value (called an asset), and that asset goes up in value and you then sell it. If you were to invest your winnings, rather than put them in a savings account, you might have to pay Capital Gains Tax too. If you didn’t quite win the jackpot but still a fair bit, you might have to pay a bit less in Income Tax on your future savings interest – 20% if your total income is less than £50,270 per year. So, if you’re the lucky one and won millions of pounds on the lottery and put it in a bank account earning interest, you’ll probably have to pay 45% tax on most of your interest each year. Your income is based on a tax year, which runs from April 6th to April 5th the following year.

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