alt Hacker NewsIt's interesting that one of the tax free investment/savings choices in the UK is basically a lottery.
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For those unaware, this comment is referring to premium bonds in the UK[1]. It is a very interesting system, I agree! But there are quite a few parts of the system that make it way more fair than a lottery.
Most obviously, it doesn't cost to enter. So the most you can "lose" is a missed interest income from putting the money in another source.
After that, it's definitely the fact that the algorithm is designed to both pay a certain percentage of people and always have specific return. [1]
You are also limited to how much you can enter to 50k.
With all that in mind, at the end of the day it feels like many small wins over time, with the super random chance of occasionally having a big-ish payout.
It's definitely designed to feel like a lottery, but in reality is way more akin to normal savings than a lottery.
Tax man: Did you earn your daily bread by working your arse off? Gimme some of that money.
Also tax man: Oh did you get that money by luck? Good for you, man.
Also tax man: Did you get inherit money by having been born into a wealthy family? Gimme some of that money.
Also tax man: Were you born into the royal family? Good for you, man. Pardon me, I mean, your highness.
I'm pretty sure all gambling winnings are tax free in the UK?
Thank the power of the horse racing/gaming/gambling lobby.
Many years ago when I lived there, I had an IG Index account - who market themselves as a "financial spread betting" service. At the time, you could buy/sell futures and options with them but it was presented in a way that emphasized that you were "spread betting" - but the mechanics were the exact same and expiries all lined up with the obvious counterparts in the liquid futures space.
So because you were NOT investing but gambling, "winnings" were tax free.
I just googled and they're still going - presumably still offering the same betting "service".
It's funny to see the efforts that scam and pure gambling services go to to try and present themselves as staid and serious "investment" business while IG Index offered access to well-regulated financial markets but kept reminding you that you were betting.