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Winning the lottery can be a life-changing experience – but not necessarily in the way you might think.
While winning the Premium Bonds £1m jackpot or securing the multimillion-pound winning ticket on the EuroMillions is the sort of thing most people fantasise about, Robin Melley, a financial adviser, warned it doesn’t always end well. A few winners have even told him that they wish they had never won the money, saying it “caused more trouble than it’s worth”.
Rather than using their winnings to make financial gains, one in 20 past lottery winners have less money now than they won, according to Camelot, the former National Lottery organiser. One in five winners say the money has not made them happier.
To help winners avoid the “curse of the jackpot”, there is help available for those with a golden ticket (or magic Premium Bonds number) from the moment they find out they have won to working out how to invest their windfall.
Here, we look at what to consider after a lottery win – or any situation where you come into a lot of money – in order to make the most of it for the future.
In this article, we will cover:
- What happens when you win the lottery?
- What financial advice do lottery winners get?
- What do lottery winners usually need to think about?
- Common mistakes that lottery winners make
- Winning the lottery FAQs
What happens when you win the lottery?
If you’ve secured a large win, it’s likely you will be contacted by someone like Andy Carter.
Mr Carter is a senior winners adviser for Allwyn UK, the operator of the National Lottery. Having previously worked for Camelot, the preceding lottery operator, he’s been telling people that their life is about to change dramatically for many years. He has met more than 2,000 winners.
“We’re making sure we’re not just throwing the money at them and running off. My role is more hand-holding. We’re not financial advisers, but we explain the process and introduce big winners – £1m or more – to financial advisers and lawyers,” he said.
“People usually go through life working to pay off their mortgage and then thinking about retirement. Then, if they suddenly have an influx of £5m, it shakes their foundation to the core. Their financial values are suddenly all being questioned.”
Mr Carter’s top tips are always the same: leave it a few weeks before making any decisions, don’t take financial advice from friends down the pub and see a financial planner. If winners are feeling overwhelmed, he recommends that they have a cup of tea with previous winners who have been in the same boat.
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What financial advice do lottery winners get?
The next step for most winners is to speak to a regulated financial adviser. They can recommend specific products and create a personalised financial plan.
Until recently, twice a month for eight years, Mr Melley was tasked with helping some of the luckiest people in the country.
A financial adviser from Bridgnorth, his firm Matrix Capital has been the place where those who win a £1m Premium Bonds jackpot were sent to navigate their new-found wealth.
After being given the news by Agent Million, winners were directed to Matrix to help them work out the best thing to do with their prize, which is paid tax-free.
“We stop them falling into the usual traps,” said Mr Melley, 65, who has been an adviser for over 30 years and helped more than 200 people manage their winnings. “Sometimes it’s a frustrating job if people do not take your advice, but other times it’s very gratifying.”
Mr Melley suggested that winners initially put the money in a safe but accessible place, pointing them towards the NS&I Direct Saver account, which pays 3.3pc interest as of July 2025. It’s not the best rate on the market, but because NS&I is government-backed, the money is fully guaranteed. A joint account can hold up to £4m.
“This gives the winner time to get used to their changed circumstances, and they’re not rushed into making life-changing decisions or long-term investments,” he said.
Most bank accounts are protected by the Financial Services Compensation Scheme (FSCS) in case the firm goes bust, but only up to an individual limit of £85,000 – rarely enough for lottery winners.
Tackling debts often comes next. Generally, winners are advised to clear any loans, credit card debt and mortgages. Not only can this save money in the long-term in terms of interest paid, but Mr Melley said there were “very positive psychological effects” to becoming debt-free.
Be careful not to trigger an early redemption penalty on a mortgage, though – it can be between 1pc and 5pc of your mortgage balance. There is normally no charge once the fixed period of your mortgage is over, so it’s worth waiting until then to pay off the loan.
When looking for a longer-term home for their cash, Mr Melley said most winners were more concerned about keeping it safe than the rate of return, so many opt to stick with NS&I’s savings accounts. The Direct Saver works for cash they might need now, and its one-year growth bond earns 4.18pc.
If you are more concerned about accessing market-leading rates, you could create a portfolio of cash accounts, with each holding up to the FSCS limit of £85,000.
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When it comes to investments, the main focus is often on tax-efficient wrappers, Mr Melley said, as often those with “sudden wealth” do not have large pension or Isa portfolios. You can pay up to £60,000 into a pension each year and get tax relief at your marginal rate, and you can pay £20,000 into an Isa. Any growth and interest earned is tax-free.
The individual funds chosen will depend on the age and risk appetite of the winner. As Mr Melley put it: “The advice we give to the parents of a four-year-old winner is completely different to a 94-year-old.”
What do lottery winners usually need to think about?
The windfall often pushes tasks that have been put off for years, such as tax planning, to the top of the to-do list.
Inheritance tax is levied at 40pc on the value of your estate above £325,000, or £500,000 if you are passing on your property to a child or grandchild.
For many lottery winners, they will suddenly have a tax liability and will need to think about giving sums away, the seven-year rule (where gifts are free from inheritance tax if you survive for seven years) and setting up trusts, which sit outside your estate so are usually free from tax.
Typically, the larger your estate, the more complex your financial affairs are, so lottery winners should get legal advice to sort out their will and power of attorney arrangements – a legal document that gives someone you trust the power to make decisions about your finances (and health, if you wish) on your behalf, should you no longer be able to.
Common mistakes that lottery winners make
While every winner will need a personalised plan, there are some pitfalls advisers will flag to anyone with a windfall.
Experts say that many winners, euphoric about the win, share their good news with too many people. Mr Melley warns his clients not to tell anyone about the money at least until they have taken professional advice and understand their options – he has never known it to work out well to abandon anonymity.
He said: “I had a case where a winner told her hairdresser about the money, and her husband told his colleagues. Within days, the whole village knew about their changed circumstances.
“It fundamentally changed their relationship with friends and neighbours, and eventually, they took their children out of school and moved to a different town.”
Another common mistake is over-promising on gifts. Caroline Rose, an adviser from the wealth manager Brewin Dolphin who works with lottery winners, said: “There are winners who are desperate to give gifts to all their family members straight away and end up being too generous, without taking into consideration exactly what is needed for them to achieve their life goals.”
Mr Melley agrees. He told a cautionary tale of an older man who had won £1m. At the end of the financial planning meeting, Mr Melley told the winner he would need £800,000 to meet his requirements for day-to-day living into retirement and his and his wife’s care costs. But the client had already promised £500,000 of the money to his children and grandchildren, and – feeling unable to take back the gifts – ended up jeopardising his own position.
Finally, winners need to think about the ongoing costs of the expensive assets they may buy.
A house worth £5m might cost £100,000 a year to run once you include gardeners, cleaners and the cost of running a home pool or sauna, for example, and insurance bills for flashy cars can add up quickly.
“This is one of the main reasons you see winners go bankrupt within five years. They end up using all their capital on funding the running costs of what they’ve bought, rather than investing it and using the income rather than capital to help fund a long-term financial plan,” said Mr Melley.
“But while there are many pitfalls, I could give you an equal number of good outcomes, especially when people follow the three key steps: take your time, don’t tell anyone and take proper advice.”
Winning the lottery FAQs
Do I have to declare lottery winnings to HMRC?
As long as you are a UK taxpayer, you do not have to declare your winnings to HMRC or pay tax on them. This is because lottery winnings are classed as gambling rather than income, and therefore do not qualify for income tax. However, depending on what you do with your winnings, you may need to pay tax on them.
How much money can I give away if I win the lottery in the UK?
Despite lottery winnings not being taxable, if you decide to give away some of your winnings, you are liable for inheritance tax. This means that the seven-year rule applies; however, you do have £3,000 as your annual tax-free allowance. You can find out potential ways to avoid inheritance tax in our dedicated guide.
