Spread betting vs CFDs
Same engine — leverage, long or short, no ownership of the underlying — different wrapper. For most UK retail traders the deciding factor is tax.
| Spread betting | CFD trading | |
|---|---|---|
| UK tax | No Capital Gains Tax or stamp duty on profits under current rules | CGT applies (18–24% above the £3,000 allowance); losses can offset other gains |
| Availability | UK & Ireland only | Most countries (banned for US retail) |
| Pricing | £ per point; expiry or daily rolling | Contracts in the asset's own currency |
| Loss offset | Losses cannot be offset against taxable gains | Losses can be offset — relevant if you also hold taxable investments |
| Typically suits | UK tax residents speculating short-term | Non-UK residents; hedgers wanting loss relief; professionals |
Which should you choose?
If you are a UK tax resident trading speculatively, spread betting's CGT exemption usually wins — especially now the annual CGT allowance is only £3,000. If you are hedging a taxable portfolio, CFD losses can offset gains elsewhere, which spread betting losses cannot. If you are outside the UK and Ireland, the choice is made for you: spread betting isn't available.
Costs are broadly similar at the same provider, and under FCA rules the leverage caps, margin-close-out protections and negative-balance protection apply equally to both. See the tax guide for HMRC's position in detail — and if you're weighing leveraged products against simply buying shares, read spread betting vs share dealing.