A winning the lottery ticket would also be a ticket to the good life surely?

Hopefully so, but in my experience of working with winners of significant prizes, the huge financial windfall brings with it unexpected responsibilities—especially regarding taxes and estate planning.

While lottery winnings in the UK are tax-free, inheritance tax can take a significant portion of your fortune if proper planning isn’t in place.

For instance, gifts given to family and friends may still be subject to inheritance tax under the ‘seven-year rule’. To explain, if you make a gift and, unfortunately, you don’t survive that gift by seven years, up to 40% of the gift’s value could be taxed.

Similarly, lottery syndicates without formal agreements risk legal complications that could result in unintended tax burdens on the poor person nominated to buy the ticket. You would not want to be that person without a proper syndicate agreement in place.

Steps like setting up trusts, considering prenuptial agreements, or donating to charities can help mitigate tax liability. Investing in businesses or agricultural properties may also provide tax exemptions. Moreover, for those thinking of buying property abroad, understanding the local inheritance tax laws is crucial.

A legal adviser can guide lottery winners through these complexities, helping protect their wealth and ensuring it is distributed according to their wishes. With expert advice, winners can plan for the future, safeguard their assets, and minimise financial risks.

So please, don’t gamble on keeping your winnings, protect them and your family with proper advice!

P.S If this article is of interest, you may also like my more detailed article: ‘Top 10 tax tips for lottery winners’

Disclaimer: This article provides general information and should not be considered legal advice.