Spread Betting vs CFD Trading in the UK
They look almost identical — both are leveraged, both let you go long or short, and neither means owning the underlying asset. The real difference for UK traders is tax. Here's how spread betting and CFDs compare on tax, cost, leverage and availability, so you can pick the right one.
Spread betting vs CFDs — full comparison
| Feature | Spread Betting | CFD Trading |
|---|---|---|
| Capital Gains Tax | Exempt for most UK retail traders | Taxable — but losses are offsettable |
| Stamp duty | None | None |
| Offset losses vs tax | No | Yes — can reduce CGT bill |
| Availability | UK & Ireland only | Worldwide (ex-US) |
| Traded in | £ per point | Number of contracts / lots |
| Commission | Usually none (cost in spread) | Spread + commission on shares/raw FX |
| Leverage | Yes (FCA caps apply) | Yes (FCA caps apply) |
| Own the asset | No | No |
| Go long or short | Yes | Yes |
| Negative balance protection | Yes (retail) | Yes (retail) |
| Best for | Tax-efficient UK short-term trading | Offsetting losses, hedging, non-UK residents |
Choose spread betting if…
- You're a UK resident and want tax-free profits (no CGT, no stamp duty)
- You trade shorter-term and are consistently profitable
- You prefer thinking in £ per point and want simple, commission-free forex and index trades
Choose CFDs if…
- You want to offset trading losses against your Capital Gains Tax bill
- You're hedging an existing share portfolio
- You're not a UK resident (spread betting is UK/Ireland only) or want contract-based position sizing
FCA brokers offering both spread betting and CFDs
- Pepperstone — raw spreads, TradingView + MT4/MT5, FSCS-covered
- FxPro — no-dealing-desk execution across MT4, MT5 and cTrader
- HYCM — FCA-regulated CFDs with a low deposit (CFD accounts)
Frequently asked questions
Is spread betting or CFD trading better in the UK?
For UK residents who are consistently profitable, spread betting is usually more tax-efficient because profits are exempt from Capital Gains Tax. For traders who expect losses they want to offset, or who hedge a share portfolio, CFDs can be better because losses can reduce a CGT bill. Many UK traders use both.
Do I pay tax on CFD profits in the UK?
Yes. CFD profits are subject to Capital Gains Tax above your annual exempt amount, but you can offset CFD losses against other capital gains. There is no stamp duty because you never own the underlying share.
Why is spread betting tax-free?
HMRC classifies financial spread betting as gambling rather than investment, so gains fall outside Capital Gains Tax and Income Tax for most retail traders. The trade-off is that you cannot claim losses against tax. This treatment could change and depends on your circumstances.
Can I do both spread betting and CFDs with one broker?
Yes. FCA-regulated brokers such as Pepperstone and FxPro offer both spread betting and CFD accounts, so you can choose the right product per trade. You typically open two separate accounts under the same login.
Informational content, not investment or tax advice. Tax treatment depends on your individual circumstances and may change. Confirm with HMRC or a qualified adviser. Leveraged products carry risk and most retail accounts lose money.
