TAX RULES WHEN YOU'VE BEEN STAKED

MATT8

Hello all,

Can anyone please advise me on the following:

If I am staked for part of the buy in for a big tournament and am fortunate enough to get a big cash, is the proportion of the winnings that I then transfer to the person who staked me taxable in any any way - do either I or him have to pay tax on that in some form or other?

Cheers,
Matt

ACEGOONER

The source of the buyin is irrelevant. UK poker players are not taxed on winnings as poker is classed as gambling in the eyes of hmrc and therefore not treated as taxable income. As long as your staker can prove where the money came from there is no issue.

scotty77

Yeah Acegooner on the money again here!  He's the forum tax expert btw so you can trust what he says!

Tikay10

Be careful with those replies, lads, they are not strictly accurate.

In GREAT BRITAIN, yes, they are correct.

Overseas, not always so.

Most people familiar with staking are acutely aware of a very recent case (2 weeks ago) of a young chap who sought staking for a Tournament in South America.

Belatedly, it was realised that 20% Tax applies on all winnings in that part of the world. The result was an almighty hoohah as to who pays the tax.

No ill-intent or deviousness was intended, but it never occurred to anyone to check the facts in advance, the result being a right royal barney.

Tax can, but not "must", (in the case of Brits) be levied in the USA, too. The whole Jamie Gold WSOP kerfuffle, where it was alleged that he did not honour his staking agreement when he won the WSOP Main Event, was caused by EXACTLY that. 

For clarification though, if we are talking Great Britain, correct, tax is not applicable on any poker winnings.  

ACEGOONER

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

Be careful with those replies, lads, they are not strictly accurate. In GREAT BRITAIN, yes, they are correct. Overseas, not always so. Most people familiar with staking are acutely aware of a very recent case (2 weeks ago) of a young chap who sought staking for a Tournament in South America. Belatedly, it was realised that 20% Tax applies on all winnings in that part of the world. The result was an almighty hoohah as to who pays the tax. No ill-intent or deviousness was intended, but it never occurred to anyone to check the facts in advance, the result being a right royal barney. Tax can, but not "must", (in the case of Brits) be levied in the USA, too. The whole Jamie Gold WSOP kerfuffle, where it was alleged that he did not honour his staking agreement when he won the WSOP Main Event, was caused by EXACTLY that.  For clarification though, if we are talking Great Britain, correct, tax is not applicable on any poker winnings.   
Posted by Tikay10

Tikay my response was based on my understanding of UK tax laws and of course I should have factored into play the situation for overseas tournaments. 

The UK has dual tax agreements with many overseas countries so it would be interesting to see how this case panned out. In anycase, if tax is to be levied it makes sense for the staker to pay a proportion of the tax bill due or in my opinion that would not be ethical or fair. 

Your friend and myne oldboy of  viva las vegas fame would no doubt be in a position to clarify. 

Tikay10

Thanks Gooner.

I only made the point because it actually happened, just 2 weeks ago.

The lad had won a package Online to a Tournament in Colombia, & so decided to sell some of his action, at a certain rate, 1.6 I think.

It THEN became apparent that there was 20% tax deducted from winnings in Colombia, which he had not realised, & so the staking agreement got a little bit heated for a while, whilst they debated who should pay the tax, as he had not mentioned it, simply because had not been aware.

No ill-intent or skullduggery existed, of course, just a genuine mistake.

Easily done. Things are rarely as simple as they seem at first sight.

Mohican

Would you say that the % of the stake is what the stakers % of the tax bill should be?? Or his payout should be worked out after the tax has been deducted???

Tikay10

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

Would you say that the % of the stake is what the stakers % of the tax bill should be?? Or his payout should be worked out after the tax has been deducted???
Posted by Mohican

It does not matter - providing it is agreed in advance.

If it is not agreed in advance, or mentioned, it has the potential effect of drastically changing the price at which the action is sold.
 
If he mentions it in advance, he can offer his action at whatever price he likes, & suggest that either party pays their share of the Tax, but it has the effect of changing the "real" price.

Mohican

Perhaps figures will help-
Staker has 10%.
Player wins £20,000. Staker gets 2k in the U.K.
 Abroad the with a 20% tax on winnings which leaves 18k-
Staker gets £1800 or should he liable for 20%(£200) of tax bill and therefore get £1600.
 

** edit the above was typed whilst you were replying Tikay. What would be the norm or is it all to do with what price is being offered, cos as you say, the  staker paying/not paying  slice of tax effects the price.
 I have witnessed next door the length of threads concerned with staking/% swaps not being fully agreed beforehand.

cleansweep

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

Be careful with those replies, lads, they are not strictly accurate. In GREAT BRITAIN, yes, they are correct. Overseas, not always so. Most people familiar with staking are acutely aware of a very recent case (2 weeks ago) of a young chap who sought staking for a Tournament in South America. Belatedly, it was realised that 20% Tax applies on all winnings in that part of the world. The result was an almighty hoohah as to who pays the tax. No ill-intent or deviousness was intended, but it never occurred to anyone to check the facts in advance, the result being a right royal barney. Tax can, but not "must", (in the case of Brits) be levied in the USA, too. The whole Jamie Gold WSOP kerfuffle, where it was alleged that he did not honour his staking agreement when he won the WSOP Main Event, was caused by EXACTLY that.  For clarification though, if we are talking Great Britain, correct, tax is not applicable on any poker winnings.   
Posted by Tikay10

Silly question but,
I agree the player being staked would not be liable for tax in the UK.

But the people who staked the player, would they not be liable for capital gains tax? As they are sponsors and not playing, if the winnings are above the threshold for capital gains are they not in danger of being taxed?

MATT8

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : Silly question but, I agree the player being staked would not be liable for tax in the UK. But the people who staked the player, would they not be liable for capital gains tax? As they are sponsors and not playing, if the winnings are above the threshold for capital gains are they not in danger of being taxed?
Posted by cleansweep

Thanks for all of your replies guys.

Cleansweep's question is kind of what I was unsure about.

I know anything I win wouldn't be taxable because its in the UK (the upcoming £500 at DTD), but I wasn't sure whether my staker might have to pay tax on any money I may (hopefully) then be handing over to him.
 
Let's say in an ideal world I won the tournament and picked up approx £100k - I know if the tax man comes asking thats fine and not taxable, but if I then transferred £20k over to my staker are there no tax implications on that transaction between me and him?

ACEGOONER

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : Thanks for all of your replies guys. Cleansweep's question is kind of what I was unsure about. I know anything I win wouldn't be taxable because its in the UK (the upcoming £500 at DTD), but I wasn't sure whether my staker might have to pay tax on any money I may (hopefully) then be handing over to him.   Let's say in an ideal world I won the tournament and picked up approx £100k - I know if the tax man comes asking thats fine and not taxable, but if I then transferred £20k over to my staker are there no tax implications on that transaction between me and him?
Posted by MATT8

Capital gains tax arises from the disposal of an asset eg shares not within a tax wrapper or 2nd property. Your mate staking you would not be classed as an investment but a gamble on you making the money. Capital Gains Tax allows you to factor in losses as well as gains and therefore is unworkable in the gambling world. In anycase its hardly going to be fair that you would not pay tax and your mate would. 

BrownnDog

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

Thanks Gooner. I only made the point because it actually happened, just 2 weeks ago. The lad had won a package Online to a Tournament in Colombia, & so decided to sell some of his action, at a certain rate, 1.6 I think. It THEN became apparent that there was 20% tax deducted from winnings in Colombia, which he had not realised, & so the staking agreement got a little bit heated for a while, whilst they debated who should pay the tax, as he had not mentioned it, simply because had not been aware. No ill-intent or skullduggery existed, of course, just a genuine mistake. Easily done. Things are rarely as simple as they seem at first sight.
Posted by Tikay10

1.6 thats some mark up. Was it Phil Ivey?

u_sud_fold

1.6 is a pretty standard mark up for a tournament by a winning player with a weak field (or perceived weak field)

waller02

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

1.6 is a pretty standard mark up for a tournament by a winning player with a weak field (or perceived weak field)
Posted by u_sud_fold

what does the 1.6 mean please?

cleansweep

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : Capital gains tax arises from the disposal of an asset eg shares not within a tax wrapper or 2nd property. Your mate staking you would not be classed as an investment but a gamble on you making the money. Capital Gains Tax allows you to factor in losses as well as gains and therefore is unworkable in the gambling world. In anycase its hardly going to be fair that you would not pay tax and your mate would. 
Posted by ACEGOONER

Thanks for the answer
but why if you win the lottery are shares taxed unless you have signed a syndicate form?

Lambert180

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : what does the 1.6 mean please?
Posted by waller02

It's kinda the ratio to what you pay and what you get.

So if you sell at 1:1 then someone will pay 10% of the buyin and get 10% of your winnings.

But if you're a really good player and can expect to go deep regularly then you can charge more, like 1.6:1 which means to get 10% of your winnings they'd have to pay 16% of the buyin. So you paying a bit more for your share, but you'd be willing to pay more to get 10% of Phil Ivey than you would to get 10% of me for instance.

waller02

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : It's kinda the ratio to what you pay and what you get. So if you sell at 1:1 then someone will pay 10% of the buyin and get 10% of your winnings. But if you're a really good player and can expect to go deep regularly then you can charge more, like 1.6:1 which means to get 10% of your winnings they'd have to pay 16% of the buyin. So you paying a bit more for your share, but you'd be willing to pay more to get 10% of Phil Ivey than you would to get 10% of me for instance.
Posted by Lambert180

ahhh ty m8

ACEGOONER

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED : Thanks for the answer but why if you win the lottery are shares taxed unless you have signed a syndicate form?
Posted by cleansweep[/QUOTE

When I said shares I meant stock market investments, ie listed companies. Not sure what that has to do with national lottery. 

BrownnDog

In Response to Re: TAX RULES WHEN YOU'VE BEEN STAKED:

1.6 is a pretty standard mark up for a tournament by a winning player with a weak field (or perceived weak field)
Posted by u_sud_fold

It happens but I dont think it's standard

u_sud_fold

well the player sold out within a few hours so the price was obviously deemed correct by the buyers

anything from 1.2 to 1.6/1.7 depending on player and perceived field strength is completley standard