Tax planning for lottery winners

There have been more than 5 700 millionaires made by the UK National Lottery games since its creation in November 1994 but what would you or your clients do with their winnings? Although this article principally concerns considerations that can be given to tax and investment for large lottery wins many of the same issues will arise for other windfalls such as a large inheritance or compensation claims.

A great number of people play the lottery. Many have dreams of winning life-changing sums of money and envisage themselves giving up work sipping champagne from beside their new swimming pool or perhaps buying a stable of supercars. Tax advisers however have more interesting thoughts about the winnings – we ponder the tax consequences arising from them.

Perhaps one of the earliest pieces of tax knowledge most...