Gambling winnings can drastically affect your financial benefits. According to the Department for Work and Pensions (DWP), winnings are considered part of your capital, which could result in a reduction or cessation of payments.
Impact of Gambling on Universal Credit and Other Benefits
Any earnings from gambling will affect your life savings if it reaches £6,000 or above. According to BirminghamLive, your UC will be cut off or withdrawn.
The DWP has confirmed that winnings from gambling activity do not fall into the definition of earnings as defined in UC Reg 52.
Therefore, this cannot be considered as ‘earnings’. Any profit made from gambling activity will not be considered as part of ‘earnings’ in the Universal Credit calculation. It will, however, be considered as part of ‘capital’.
Recipients must notify the DWP of any change of financial circumstances that might affect their benefits. This includes any winnings from gambling activities, which will affect the benefit awards.
Tax Consequences on the Financial Transactions and Their Regulation
Gambling income is not taxable, but interest earned on such income is taxable. This tax is self-assessed and deducted from the claimant’s income by the HMRC, who also share such information with the DWP to avoid cases of fraud.
The DWP is 100% within its rights to examine bank statements and receive information regarding accounts with online betting websites. Another practice that may be considered capital is matched betting.
One of the techniques used is to use the free bets that bookmakers offer to make a profit. In some cases, people have received amounts from matched betting that have been considered their monthly earnings, leading to deductions in the benefit.
The DWP can request statements from other financial domains, for example PayPal, where cash can be kept. Gambling accounts online are recorded in your credit record as credit checks are carried out when opening an account.
The DWP will therefore be well-informed of all the accounts during the review of the claim.
Capital Limits and Benefit Entitlements
Anyone on UC, income-based JSA, income-based ESA, IS, or HB (below State Pension age) will not be able to earn more than £16,000 in capital. Staying above this amount will result in the loss of your benefit privilege. It is therefore advisable to aim for a lower amount.
If the capital is between £6,000 and £16,000, the business is considered to be earning £4 per month from the capital. This is calculated as 65 for every £250 or part of £250.
Let's say you have £6,300. The first £6,000 is ignored, and the remaining £300 is treated as giving you an income of £8.70 off. This is then deducted from the amount of Universal Credit you receive.
For those receiving income-based JSA, income-related ESA, income support and housing benefit, the amount of £1 is deducted from the calculated amount for each £250 or part of £250 above £6,000.
Pension Credit is slightly more complex because a couple can have up to £10,000 in capital before it starts to be reduced. For each £500 over £10,000 that a couple has, it counts as £1 of income per week. Unlike all the other credits, there are no limited amounts that can be saved for Pension Credit.
Support for Gambling Problems
If you have any gambling-related problems, you can get help from one of the many online services available, such as GamCare, Gambling Therapy, Gamban, and GambleAware. These platforms provide clear and concise information and tips concerning gambling disorders.