by Nick Robinson | Nov 12, 2015 | Taxation
From now on, every time we watch Back To The Future Part II, it’s going to be a movie about the past. A past that didn’t exactly happen as it was predicted. But I’m not that bothered about hoverboards, self lacing shoes, and flying cars. For me, that film was all about Biff’s money. The money he gained from using time travel, and the infamous Gray’s Sports Almanac, to ensure that he won every bet he put on between 1955 and 2000.
And it worked, too.
Biff became a multimillionaire.
But let’s think for a moment… What about taxes? Everyone pays taxes, right?
Well, yes and no. In the UK, there is no tax due on gambling winnings. It would be a thankless and almost impossible task to try to collect the tax owed on every single win. Perhaps it would be doable for those who fill in their own assessment forms, but it would include every scratch card, every £25 Lotto win, every flutter on the horses that brought in one pound more than you paid out in the first place… So the problem would be that people would stop gambling (because it wouldn’t be worth it when the tax was taken into consideration), or it would go underground.
Gambling establishments such as casinos, bookmakers, and betting shops all pay tax. The employees within them all pay tax. There is tax due on the landlord’s rent, on the consumables, on almost everything else that goes in or out of the shop, or building. Therefore, the wisdom seems to be that because so much else is taxable, and so much other tax is paid, by keeping the winnings themselves tax free, more money is actually collected in taxes than it would be if a gambling tax was introduced and the whole thing became an underground operation.
So, if Biff was a gambler (although I use that term loosely, since he actually had the answers so it wasn’t actually a gamble at all) in the UK, he wouldn’t have had to pay a penny on his winnings in tax.
Even if he was considered a ‘professional gambler’ (which, let’s face it, he was). You might imagine that professional gamblers, since their winnings are their main income, would have to fill in a self assessment form and pay tax on what they brought home. But that’s not the case. This is because the government has no way to tell whether someone is an occasional gambler, or a professional one. Yes, someone might have made a lot of money through gambling, but it could have been a one off thing, a one time Lotto ticket, for example, that netted them the rollover. They immediately became millionaires through gambling, but they certainly didn’t do it in any professional capacity. They are not professional gamblers. A professional gambler might – might, but it’s not guaranteed and that’s the point when it comes to gambling, so please beware – also make just as much money. It might take years, or it could come all at once. But there is technically no difference between the two wins, and therefore no way to tax one and not the other.
So, again, the UK version of Biff would still not pay any tax. Not on his gambling winnings anyway. But the storyline implies that he built up a multinational empire of some description, using his winnings to make himself into a tycoon of epic proportions. So he would most certainly have been paying tax somewhere down the line.
The thing is, though, Biff lived in America. And in America, gambling winnings are most definitely taxable. But as to how much he actually would have paid, it’s impossible to tell. Firstly, we don’t know how much he made through gambling (it’s a lot, but how much is a lot?), and secondly, we don’t know how much he made through the business, investments, promotional work and so on. I won’t be getting the calculator out just yet, but I think it’s safe to assume the US government were fairly pleased with Biff’s winning streak…