I can answer for the UK - the system is designed so that most people don't explicitly interact with the tax system. The only people that need to do so is the self-employed, running a business, or very highest earners. For everybody else, they can take advantage of tax breaks without filling in any forms, just by opening the right bank accounts/pensions or getting certain services from their employer. When they qualify for benefits, like Child Benefit, it gets paid separately into their bank account.

A surprising number of tax benefits are possible this way - even the income tax deduction on charitable giving is done by getting the charity to do the paperwork instead of the individual taxpayer.

So when it comes to taxing something that isn't going to be a significant tax stream and would require people to fill in declarations, the solution is-- just don't tax it.

And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them. But if you still tried it, it would fall under the General Anti-Abuse Rule.