Is the Irish Lotto Tax Free?
One of the most commonly asked questions about the Irish lottery is whether or not it is necessary to pay taxes on any money that you win from it. The good news is that lottery jackpot wins are not subject to tax in the UK or Ireland. Any money that you win from the Irish Lotto is completely tax-free. However, there are other taxes which could impact on lottery winners.
While lottery jackpot winnings are not taxed in Britain, there are three other forms of tax which could affect how much of your win you get to keep. Let’s take a look at these one by one:
Passing lottery winnings on to a family member or friends in your will can involve their having to pay tax on the amount they receive. As long as the value of your estate is less than £325,000 then you won’t have to worry about Inheritance taxes, but of course the Irish Lotto Jackpot will be larger than that. Above that amount, you won’t be taxed if you leave it to your spouse, civil partner, a charity or a community amateur sports club. You can also leave up to £450,000 to your kids or grandchildren. Otherwise, Inheritance tax in the UK is 40% for everything above your thresholds.
Financial gifts (or those with a financial value) can also be subject to the same Inheritance Tax as is imposed on your estate after you die. Anyone that you give gifts to will be charged Inheritance Tax of 40% if you give away more than £325,000 in the 7 years before your death. That means that your generosity with your Irish lottery winnings could lead to a tax bill for the person receiving those gifts. However, this is only the case if you die within 7 years of giving the gift – otherwise the gifts are tax free. There is a £3,000 tax-free gift allowance every year.
We have established that your Irish lottery jackpot winnings are not taxable, but that is not the case on any income you make from these winnings. For example, if you leave the money in a bank account to earn interest, that interest is taxable as an income or can be subject to Capital Gains Tax.
While a big win on the Irish Lotto is certainly a cause for celebration, it is always a good thing to be aware of the financial implications. After all, people who are not used to handling huge sums of money can struggle when millions of pounds hit their bank accounts. That is why we always recommend that you seek out professional financial advice to help you to manage your millions sensibly and to avoid paying any unnecessary taxes.