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Spread betting tax treatment (UK)

In the UK, spread betting profits are generally treated as gambling winnings and fall outside capital gains tax and stamp duty, while CFD profits are generally within the capital gains regime.

The general position, stated factually and not as advice, is that a spread bet is legally a bet, so gains are not usually subject to capital gains tax and no stamp duty arises on the underlying. The corollary is that losses cannot usually be set against gains elsewhere, which is a real cost for anyone who expects losing years.

A cfd is treated differently: no stamp duty, because nothing is bought, but gains are generally within the capital gains regime and losses can generally be offset against other chargeable gains.

Two caveats are important. Treatment depends on an individual's own circumstances, including whether the activity is judged to amount to a trade, and tax rules change. Anyone relying on the difference should confirm their position with a qualified adviser or the tax authority rather than a broker's marketing page.

Example: two traders each make GBP 20,000 of profit. The spread better's position may fall outside CGT entirely; the CFD trader's gain is generally chargeable, subject to the annual exemption and their own rate.

Related: spread-betting, cfd, fca, cfd-vs-spot-fx

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

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