Do You Pay Tax on a UK Prize Competition Win?

You have just won a £100,000 car. Does HMRC want a slice? In most UK cases, no — but there are edge cases worth understanding.

The headline rule

Winnings from UK prize competitions, lotteries, and gambling are not subject to income tax in the UK. The win itself is yours, full stop. This is settled HMRC policy and applies whether you win £50 cash or a six-figure supercar.

Where it gets more interesting

• Capital Gains Tax. If you win a car worth £80,000 and sell it later for £100,000, the £20,000 gain may be subject to CGT (depending on your annual allowance and the asset). For most cars sold near the win value, this is a non-issue.
• Income from the prize. Win £200,000 cash, put it in a savings account, the interest is taxable just like any other interest income. The capital is not.
• Inheritance and gifts. If you give a prize away, normal UK gift / inheritance tax rules apply. Seven-year rule and all that.
• Business use. If you immediately put a won asset into business use, things get more complex. Talk to an accountant.

What about the cash alternative?

Same answer: the cash itself is tax-free at the moment of winning. What you do with it afterwards is taxed normally.

This is not tax advice

This is general information for UK entrants in 2026. Rules change and your circumstances matter. Speak to a qualified UK tax adviser before making any decisions on a meaningful prize.