THE GUIDE

Prediction markets and UK tax

Tax treatment cannot be determined from the words “prediction market” alone. Here is a careful UK framework for the questions to bring to an adviser.

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Do not assume a tax answer from the design of an app. In the UK, gambling winnings for customers are generally not taxed as such, according to the Gambling Commission’s published explanation. That statement is not a ruling on every event contract, cryptoasset movement or financial transaction described online as a prediction market.

Start with the actual transaction

Identify the operator, the contractual product, the payment or settlement asset, and whether a cryptoasset was bought, sold or transferred as part of participation. HMRC says buying and selling cryptoassets is not automatically gambling. A crypto-denominated market may therefore raise questions beyond whether an event position won or lost.

Keep records, avoid assumptions

Keep records of the contract terms, dates, amounts in pounds sterling, fees and any associated asset transfers. The treatment may depend on your circumstances, activity and applicable law at the time. For an individual return or a business activity, consult a qualified UK tax adviser; this page is not tax advice and does not assert a classification for a named platform.

Good questions

Frequently asked

01Are prediction market profits tax-free in the UK?

Do not assume so. Ordinary gambling winnings for customers are generally not taxed, but event contracts and associated crypto or financial transactions need product-specific analysis. Ask a qualified adviser.

References

Sources & further reading

  1. Gambling Commission: winnings from gambling for customers (opens in a new tab)
  2. HMRC Cryptoassets Manual: cryptoassets and gambling (opens in a new tab)
  3. Gambling Commission: prediction markets and Great Britain (opens in a new tab)

Keep asking questions.
That is the point of a good guide.