[eli5] How do tax-free winnings work when winning a competition on a gameshow/phone-in

Question

Bit random but I didn’t know where to post to get an answer. I was watching TV last night when an advert came up for a phone-in competition in which you could win £20,000 tax-free cash. How is that cash tax-free? What do the competiotion hosts do to get that money tax-free?

In: 14

Answer 1

It’s tax-free, meaning that the winner isn’t required to pay income tax on that amount. In many places, winnings aren’t required to be declared as income.

The competition hosts withraw it from a bank account.