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