UK Guide · Updated August 2026
Spread Betting vs CFD Trading UK 2026: Tax, Costs & Which to Choose
Reviewed by Markets Desk · FX-Brokers editorial
Spread betting and CFD trading are the same trade wearing different legal clothes. Both are FCA-regulated, both are capped at the same retail leverage, both carry negative balance protection. What separates them is how HMRC treats the result — and whether a losing year is worth anything to you at tax time. This guide sets out the head-to-head, the tax position with the HMRC manuals behind it, what the difference is worth in cash, and which product fits which trader.
Quick Answer
For a UK resident who expects to be profitable, spread bettingis usually the more tax-efficient of the two: profits are generally free of Capital Gains Tax and Stamp Duty. For a trader who wants losses to count for something — or who is not UK resident — CFDs are the better structure, because CFD losses are allowable capital losses that can be offset against other capital gains.
Everything else — FCA authorisation, the 30:1 major-pair leverage cap, the 50% margin close-out, negative balance protection, FSCS cover to £85,000 — is identical across both products. Tax treatment depends on individual circumstances and can change. This is general information, not tax advice.
Spread Betting vs CFDs: Head to Head
Twelve points of comparison. Note how few of them actually differ: the FCA regulates both products under the same rulebook, so the genuine fork is tax, loss relief, currency and eligibility.
| Factor | Spread Betting | CFD Trading |
|---|---|---|
| What you are actually doing | Staking an amount per point of price movement. HMRC treats the position as a bet, not an investment. You never own the underlying instrument. | Entering a contract to exchange the difference in an instrument’s price between opening and closing. You never own the underlying instrument. |
| Tax on profits | Generally free of Capital Gains Tax for UK residents, because the position is treated as a bet (HMRC manual CG56105). Income Tax does not normally apply either. | Subject to Capital Gains Tax — 18% within the basic-rate band and 24% in the higher and additional bands, on gains above the £3,000 annual exempt amount. |
| Stamp duty / SDRT | None charged to you. No underlying share is bought or sold, so no Stamp Duty Reserve Tax arises. | None charged to you either — a CFD transfers no ownership of the underlying share. Stamp duty is not the difference between these two products; Capital Gains Tax is. |
| Losses | Not deductible. A losing year gives you no relief and nothing to carry forward — the mirror image of the tax-free upside. | Allowable capital losses. They can be set against other capital gains in the same tax year, and carried forward against future gains once claimed with HMRC. |
| How you size a position | In pounds per point. A £10-per-point bet on GBP/USD makes or loses £10 for every pip the market moves. | In contracts or lots. One standard FX lot is 100,000 units of the base currency, where one pip is worth about $10 on a USD-quoted pair. |
| Currency exposure on the result | Your stake and your profit or loss are denominated in your account currency, typically sterling. No separate conversion is applied to the result. | Profit and loss accrue in the instrument’s quote currency — US dollars on EUR/USD — and are converted into your account currency, at a conversion cost unless the two already match. |
| Cost structure | The cost sits in the spread, charged once when you open. No separate commission. Positions held past the daily cut-off attract overnight financing. | Either an all-in wider spread with no commission, or a raw spread plus a per-lot commission. Overnight financing applies the same way. |
| FCA regulation | FCA-regulated. The FCA’s permanent product-intervention rules (PS19/18) cover financial spread bets explicitly. | FCA-regulated. The same PS19/18 rules cover CFDs and rolling spot forex — the regulator treats all three identically. |
| Retail leverage cap | 30:1 on major currency pairs, 20:1 on minor pairs, gold and major indices, 5:1 on individual equities, 2:1 on cryptocurrencies. | Identical caps. There is no leverage advantage to either product for a UK retail client. |
| Retail protections | 50% margin close-out rule and negative balance protection. FSCS covers eligible clients up to £85,000 if the firm itself fails. | The same 50% close-out, the same negative balance protection, the same £85,000 FSCS limit. Protection is not a differentiator. |
| Who can open one | Offered only to UK and Irish residents. The product does not exist under EU (ESMA) rules, so an EU-resident account cannot hold spread bets. | Available to UK, EU/EEA and most other residents, through whichever regulated entity serves your country of residence. |
| Best suited to | UK and Irish residents who expect to be profitable, trade in sterling, and would otherwise pay CGT on gains above the annual exemption. | Traders who want loss relief, non-UK residents, anyone running a non-GBP base currency, and those hedging a taxable portfolio where losses need to be usable. |
The Tax Position, and the HMRC Manuals Behind It
Read this first.Tax treatment depends on individual circumstances and can change. Nothing on this page is personalised tax advice, and we do not give any. If your position is anything other than straightforward — trading as your main income, a company account, non-domiciled status, or gains large enough to move you between bands — take advice from a qualified adviser or check directly with HMRC.
Spread betting: generally outside CGT and stamp duty
For most UK retail traders, spread betting profits are free of Capital Gains Tax, Income Tax and Stamp Duty. The reason is classification rather than concession: HMRC treats a financial spread bet as a bet. Three of HMRC's own public manuals set the position out.
- BIM22015— Business Income Manual, betting and gambling. HMRC's guidance is that having a system for placing bets, or being successful enough to earn a living from gambling, does not by itself make the activity a trade. Betting wins are not taxable income for the typical retail bettor.
- CG56105— Capital Gains Manual, financial spread betting. It states that no chargeable gains and no allowable losses arise from spread betting. Profits are outside CGT; losses are correspondingly worth nothing for tax.
- BIM22020— the boundary. Where spread betting is organised as a business and forms the taxpayer's primary source of income, HMRC can assess the profits as trading income. This is the main exception to the tax-free rule, and it is the one people ignore.
Spread bets are also exempt from Stamp Duty Reserve Tax, because no underlying asset is bought or sold. In practice, a UK employee or self-employed person who spread bets alongside their main income pays no tax on winnings and gets no relief on losses. That legal classification as gambling is also why the product is offered only by FCA-regulated firms to UK and Irish residents, and why it has no equivalent under EU rules.
CFDs: inside CGT, but losses count
CFD profits are subject to Capital Gains Tax. Following the rate change on 30 October 2024, gains are taxed at 18% within the basic-rate band and 24% in the higher and additional bands, on gains above the £3,000 annual exempt amount. Gains are declared on a self-assessment return.
The compensation for that is loss relief. CFD losses are allowable capital losses: they can be set against other capital gains in the same tax year — including gains that have nothing to do with trading, such as a share sale or a second property — and carried forward against future gains once claimed with HMRC. A spread bettor who loses £8,000 in a year has lost £8,000. A CFD trader who loses £8,000 has an asset for tax purposes.
What the difference is worth in cash
The table below applies the 2026 allowance and rates to a full year of net trading gains. The spread betting column is zero throughout, for the reasons above.
| Net gain for the year | Taxable after £3,000 exemption | CFD — CGT at 18% | CFD — CGT at 24% | Spread bet |
|---|---|---|---|---|
| £2,500 | £0 | £0 | £0 | £0 |
| £5,000 | £2,000 | £360 | £480 | £0 |
| £10,000 | £7,000 | £1,260 | £1,680 | £0 |
| £20,000 | £17,000 | £3,060 | £4,080 | £0 |
| £50,000 | £47,000 | £8,460 | £11,280 | £0 |
Illustration only, and deliberately conservative: in reality the rate is worked out on your total taxable income plus gains, so a single gain can straddle both bands rather than falling entirely into one. Rates and the annual exempt amount as at August 2026. Tax treatment depends on individual circumstances and can change. This is general information, not tax advice — see our sourced answer on spread betting and tax and how forex trading is taxed in the UK.
What a Trade Actually Costs on Each
Tax is the headline, but traders ask about cost first, so here is the arithmetic. The two products are priced the same way — the spread, plus overnight financing if you hold past the daily cut-off, plus a commission on raw-spread CFD accounts. What differs is the unit you are charged in.
CFD — raw spread plus commission
- EUR/USD spread
- 0.0 pips (Razor), 0.69 pips (Standard)
- Commission
- $3.50 per lot per side (Razor), None (Standard)
- Minimum deposit
- None
- UK entity
- FCA 684312
One standard lot of EUR/USD — 100,000 euros of exposure — costs $7.00 round turn in commission (charged both when you open and when you close), on top of whatever the raw spread is at that moment. Twenty round-turn lots in a month is $140.00 in commission before spread and before financing.
Spread bet — pounds per point
The equivalent position
One pip on a standard lot is worth about $10, so a stake of roughly £10 per point is the same size of position, give or take the GBP/USD rate on the day. There is no separate commission: the whole cost is the spread, paid once on entry. A one-point spread on a £10-per-point bet costs you £10 to get in and out — then financing if you hold overnight.
Which of the two is cheaper depends on the broker, the pair and the session — not on the product. Spreads and financing rates vary far more between firms than they do between spread bets and CFDs at the same firm.
The point of the exercise.Cost differences between two FCA-regulated firms are measured in pounds per trade. The tax difference on a profitable year above the £3,000 exemption is measured in hundreds or thousands. If you are choosing on economics alone, get the tax structure right first and treat the spread as the tie-breaker.
Who Each Product Suits
Spread betting suits you if…
- — You are UK or Irish resident. It is not offered anywhere else, and it does not exist under EU rules.
- — You expect net gains above the £3,000 annual exempt amount, so CGT would otherwise bite.
- — Sterling is your account currency and you would rather not convert a dollar-denominated result.
- — You are trading directionally and discretionarily, in stakes you can express per point.
- — You have no other capital gains for a trading loss to be set against, so loss relief is worth little to you anyway.
CFDs suit you if…
- — You are not UK or Irish resident, in which case CFDs are the only one of the two available to you.
- — You want losses to be usable: allowable capital losses, offsettable against other gains and carried forward.
- — You have other capital gains — shares, property, a business disposal — that a trading loss could shelter.
- — You run a non-GBP base currency, or trade instruments where lot sizing is how you think about risk.
- — You want raw-spread pricing with an explicit per-lot commission, which is a CFD-account convention.
How to choose, in order
| Step | Question to answer | What it decides |
|---|---|---|
| 1 | Where are you tax resident? | Outside the UK and Ireland, the question is settled: CFDs. |
| 2 | Do you realistically expect to clear the £3,000 exemption this year? | Below it, the tax difference is nil and the choice comes down to cost and platform. |
| 3 | Do you have other capital gains a loss could be set against? | If yes, CFD loss relief has real value and may outweigh the CGT on gains. |
| 4 | What currency is your account, and what do you trade? | A sterling account trading USD-quoted pairs pays conversion on every CFD result. |
| 5 | Only now: whose spread, financing and platform? | Compare all-in cost at the firms that offer the product you settled on above. |
One structural point people miss: you cannot hedge a spread bet with a CFD on the same underlying and expect the tax treatment to survive the round trip. If tax efficiency is the reason you chose spread betting, run that strategy in spread bets alone.
Free: Broker Regulatory Cheatsheet
4-page A4 reference — retail leverage caps by regulator, regulator strength ranking, and the 12-point pre-account checklist. Plus weekly broker updates.
No spam. Unsubscribe at any time. We respect your privacy.
Which UK Brokers Offer Each Product
A note on how this list is built, because it is narrower than most: we list a spread betting account for a broker only where our own broker dataset explicitly records one. Where the data does not record spread betting for a firm, we do not claim it — even if the firm is well known for the product. For the full platform-by-platform comparison, including firms we do not carry structured data on, see best spread betting platforms in the UK.
Spread betting accounts on record
IG
FCA 195355IG is one of the longest-established retail brokers (founded 1974), offering 17,000+ instruments, a BaFin-regulated EU entity, and an award-winning proprietary platform.
- Account types on record
- CFD, Spread Betting (UK), Share Dealing, Professional
- EUR/USD
- 0.6 pips average
- Commission
- None (spread-only on most accounts)
- Retail leverage
- Up to 1:30
CFD accounts available to UK traders
Every firm below holds an FCA-authorised entity onboarding UK retail clients, with FSCS cover to £85,000 and the standard retail protections. Figures are taken verbatim from our broker dataset.
| Broker | EUR/USD | Commission | Min deposit | UK entity | |
|---|---|---|---|---|---|
| Pepperstone | 0.0 pips (Razor), 0.69 pips (Standard) | $3.50 per lot per side (Razor), None (Standard) | None | FCA 684312 | Visit Pepperstone |
| Tickmill | 0.0 pips (Raw), 1.6 pips (Classic) | $3.00 per lot per side (Raw), None (Classic) | EUR 100 | FCA 717270 | Visit Tickmill |
| Trade Nation | 0.6 pips (fixed) | None (fixed spreads, spread-only) | None | FCA 525164 | Visit Trade Nation |
A broker appears with an outbound link only where we hold a live commercial arrangement and an unexpired compliance ruling covering UK residents. That gate is deliberately strict, so this table is shorter than the market — it is not a ranking of every FCA firm.
Related Reading
Frequently Asked Questions
Is spread betting really tax-free in the UK?
How is CFD trading taxed in the UK?
Do I pay stamp duty on spread betting or CFD trading?
Can I offset spread betting losses against tax?
Is spread betting or CFD trading cheaper?
Can non-UK residents open a spread betting account?
CFD Risk Warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This website is for informational purposes only. The content does not constitute investment advice. Trading leveraged products carries a high level of risk and may not be suitable for all investors. Past performance is not indicative of future results. UK retail leverage limits apply (FCA): up to 30:1 on major FX pairs, 20:1 on minor FX, 20:1 on major indices, 10:1 on commodities, 5:1 on equities, 2:1 on crypto.