Prizepot › Tax on competition and prize draw winnings
Tax on competition and prize draw winnings
There is no single answer that fits every prize. We have not found one official page that covers ordinary prizes for private individuals, so this page sets out what we can confirm and where to check.
An honest starting point
Many websites say that all prizes are tax-free, or that all are taxable. We could not confirm either from one official source. The truth appears to depend on your circumstances, so please do not treat this page as tax advice. If you win something large, speak to an accountant or contact HMRC.
What HMRC has said in one documented case
The writer Christopher Fielden published HMRC's replies to his questions about writing competition prizes. They are specific to writers, but they show how HMRC thinks:
- In an earlier reply, HMRC said prize money can be a "professional receipt" when you enter competitions of your own accord, with entry fees an allowable expense.
- In a February 2017 reply, HMRC said that whether a competition is free to enter has no bearing on whether winnings are taxable. Whether you entered yourself, or someone else entered without your consent, is relevant. HMRC said there is "no easy answer" and that whether you are a professional, including part-time, is often important. It pointed to its manual, BIM50710.
The author notes he is not a tax adviser, and the 2017 reply is the most recent HMRC position on his page. The page does not say whether it has changed. The lesson is that, for people who enter competitions as part of a trade or profession, prizes can be taxable income. For a hobby entrant, the position may be different, but we cannot give you a rule.
Prizes from work and other special cases
Prizes linked to your job, a business you run or an arrangement with a company may be treated differently. If you enter competitions regularly in a way that looks like a business, speak to an adviser or HMRC.
VAT is for operators
VAT on prize draws is a question for the companies that run them. Out-Law (Pinsent Masons) reported that on 17 February 2026 a Treasury minister confirmed that prize draws offering both paid and free entry routes are not eligible for VAT exemption, so paid entries are subject to VAT at the standard rate. The article also quotes lawyers who say HMRC's position is complex and may be challenged. This affects operators and, possibly, ticket prices. It does not change what an entrant should declare.
Never pay "tax" to get a prize
Scammers often claim you must pay tax, legal costs or a bank charge before you can collect a prize. Action Fraud lists such requests for fees as a warning sign, and the CAP Code says consumers must not be charged to claim a prize. Whatever the tax position, a genuine promoter does not ask you to send money to release a prize. See spotting scam competitions.
Keeping records
- Save the entry confirmation, terms and the winner notification.
- Note the date and value of any prize.
- Keep records of any entry fees you paid.
This will help if HMRC or an accountant asks. See claiming your prize.
Where to check
Search GOV.UK for HMRC guidance, or speak to a qualified adviser. If you are a writer or professional who enters competitions, the HMRC manual reference BIM50710 is the one HMRC pointed to. This is general information, not tax advice.
Frequently asked questions
Are competition prizes taxable in the UK?
It depends on circumstances. HMRC has said, in replies quoted by one writer, that there is no easy answer and that being a professional is often important. Ask HMRC or an adviser about a particular prize.
Should I pay tax to a company before getting my prize?
No. Requests for fees or taxes before you can collect a prize are a scam warning sign, and the CAP Code says consumers must not be charged to claim a prize.
Does VAT on prize draws affect entrants?
VAT is a matter for operators. Out-Law reported in 2026 that HMRC's position is that mixed paid and free draws are not VAT-exempt.