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Spread Betting vs CFDs

Read more about what spread betting is, how to trade and discover a range of tips and strategies.

Spread betting and contracts for difference (CFDs) are leveraged-based derivative products for trading on thousands of different financial markets. They enable traders to speculate on a security’s price without needing to own the underlying instrument.

Spread Betting v CFD Trading

Spread Betting v CFD Trading

Spread betting and trading CFDs share many characteristics but there are some key differences. The main difference is the way they are treated for tax– spread bets are free from capital gains tax in the UK*, while CFDs are not.

• CFD trading is not tax free in the UK, while spread betting is.
• CFD equity trades ask for a commission – spread bets on shares do not.

Spread bets have a fixed expiry date. CFDs – excluding futures, binaries and options – do not have an expiry date.

With CFDs there is no need to pay stamp duty, but you do need to pay capital gains tax on profits. Losses can therefore be used to offset taxes elsewhere.

ETX Capital offers spread betting and trading on CFDs across thousands of markets. If you live in the UK, you may find that spread betting is better suited because it is tax free, although some UK-based investors still prefer CFDs.

With spread betting the contract size is determined by the amount of money you are prepared to stake per point. CFD trading involves buying or selling contracts that represent a certain amount per point in the market.

Spread Betting
No Capital Gains Tax
but you cannot use losses to offset tax liabilities
No Stamp Duty
No Commission
Leveraged product
Trade on rising and falling markets
Prices based on underlying market
Expiry dates on all spread bets
 
CFDs
Capital Gains Tax to pay
but can use losses to offset tax liabilities
No Stamp Duty
No Commission (forex)
Leveraged product
Trade on rising and falling markets
Prices based on underlying market
No expiry dates
except on futures, binaries and options

*Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

Why Spread Bet with ETX Capital?

Why spread bet with ETX?

• Tight spreads from 0.6 pips on forex pairs and, from 1pt on indices
• Instant execution
• Over 5,000 markets to trade on
• Fully customisable charts and technical drawing tools

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets orCFDs work and whether you can afford to take the high risk of losing your money.

Monecor (London) Ltd is a member firm of the London Stock Exchange. Authorised and regulated by the Financial Conduct Authority with Financial Services register number 124721.

The information on this site is not directed at residents of the United States, Belgium, Canada, Singapore, or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

In the unlikely event of ETX becoming insolvent, segregated client funds cannot be used for reimbursement to ETX Capital’s creditors. If we are unable to satisfy repayment claims, eligible claimants have the right to compensation by the Financial Services Compensation Scheme (FSCS), up to £50,000. If one of the banks ETX Capital uses to hold client money goes into liquidation then the losses would be shared by clients in proportion to the share of the money held with the failed bank. Funds lost this way may be compensated under the FSCS up to a limit of £85,000 per person.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.