Online Gaming & Capital Gains Tax

Curious247

Hi All,

I am new to this site as a member, but have looked at it briefly before and it does look like quite a good site for advise, so thought I'd drop a question in to see if anyone knows about Capital Gains Tax in relation to online gaming.

I play an online game that has a virtual economy where you pay a subscription to play the game. If you build up enough in-game currency, there are websites that will pay you in real life cash for your in-game money.

So my question is, if the amount you could get for this in-game currency was in the region of £10,000's of real life money, would this still be subject to Capital Gains Tax because you have already paid a subscription to make it over a period of many years to the manufacturer of the game?

Also, if it was still subject to CGT based on this amount, if i decided to give this in-game money away to friends/family and they then covert it to real-life money, would that also have any tax implications if the real life amount was under any CGT threshold?

Any advise would be appreciated.

Kind Regards.

chrismac1

The last poster is going to get kicked off this site anytime soon. In my view what you are doing is no different to playing online poker or at online casinos or bookmakers. As someone who quit after taking £70,000 profit out of these places between 2002 and 2008 - and I know several UK citizens who took over £500k each during the same period as full-timers - betting profits are totally exempt from UK taxes. None of us have ever heard anything from HMRC about our profits and nor should you.

Curious247

Hi, thanks for your reply.

It is quite good to hear that. But if anyone else has any comments, the more info the better really.

Have reported 'roditashakya' due to the above comments. No idea who this is, but they certinaly seem to have a problem, and not with money. :P

chrismac1

From a tax point of view, the key thing is being able to demonstrate that you are not a "trader". For example one tax case in the 1960s surrounded a successful speculation in silver around the time of one of our devaluations.

In my case I had a full-time job whilst I as doing my betting, so there was no way HMRC were going to be able to show I was a full-time trader and hence taxable. In the case of two other members of our team they were full-time for all or part of the year so they needed more care.

One took occasional short-term IT contracts around the times of the year when our betting was likely to be in a lull, so the end of the tennis season was one because we bet on tennis matches a lot. So he paid tax via his IT work. Another built up a portfolio of 12 rental properties from his betting profits, so paid tax on his rentals. That said, we were on betting websites giving and getting advice from hundreds of other bettors - a bit like this site only for betting! - and many of them were in the UK betting full-time and although the tax issues came up from time to time no-one ever mentioned any actual interest from HMRC.

chrismac1

Note also that the situation in foriegn countries is very different. In the USA - the pits! - even though this type of betting is illegal under the Wire Act you still must declare it. In Australia it is similar. So unusually this is one sector where being in the UK has a tax advantage.

MacMickster

I very much doubt that HMRC will ever try to tax gambling profits. If they were to do so then they would open themselves up to the majority of losing gamblers trying to claim their losses and have these set against their general income.