Spread betting tax in the UK

A financial spread bet means you bet on whether a market price goes up or down, and the asset itself never becomes yours. In section BIM22015 of the Business Income Manual, HMRC says that betting and gambling don't count as trading. According to that manual, a taxpayer who places a spread bet isn't normally carrying on a trade.

HMRC treats you as a punter, not as a business, so your winnings don't count as earned income. The money you make isn't subject to Income Tax. Nor do you owe any Capital Gains Tax. Profit from selling an investment whose value has risen is normally charged to Capital Gains Tax.

HMRC taxes the business profits of the bookmaker or broker that organises the spread bet rather than taxing individual punters. These wins don't have to go on a tax return. Our directory of spread betting companies lists the UK providers that offer these accounts.

In the UK, spread betting losses can't be used to claim tax relief. Under BIM22015, HMRC's position is that spread bettors pay no tax on profits and receive no relief for losses.

Money you lose on a spread bet can't be deducted from your salary. Nor will it lower your business income. Betting losses can't be used to reduce Capital Gains Tax bills on shares or property you've sold. Betting results stay apart from what you report on your tax return.

Some rare exceptions apply, and HMRC describes them in BIM22020 of the Business Income Manual. They concern the tax free spread betting rule. A win is taxed only if it arises directly from an existing trade you already carry on. An opportunity your job gives you isn't enough on its own. HMRC reviews the contract terms and the economic substance.

Simply wanting to make a profit doesn't turn you into a taxable trader. Placing bets systematically and repeatedly isn't conclusive by itself either. How HMRC assesses frequent activity is covered in our day trading tax guide for the UK. Courts weighing all the circumstances judge the overall impression under HMRC's badges of trade rules. Tax on your wins may apply if your bets mirror the transactions of an existing business that you already run.

A CFD, short for a contract for difference, is a deal with a broker to settle an asset's price change in cash. Your trading screen shows spread betting and CFDs as similar, but HMRC taxes the two differently.

Buying the actual shares isn't part of either product. Stamp Duty Reserve Tax doesn't apply to either of them. The tax normally charged on buying UK company shares is Stamp Duty Reserve Tax. Even so, HMRC treats retail CFDs as financial futures within the Capital Gains Tax regime.

Every credit, debit and commission counts towards your capital gains calculation once you close a CFD. Net gains mean you owe CFD tax in the UK, and net losses can be set against other capital gains.

You can report chargeable CFD gains on a Self Assessment return, or use HMRC's real time service for Capital Gains Tax. Under the real time service, by 31 December after the tax year you must report, and by 31 January you must pay. The UK tax rules described here are general information only, not personal tax advice for you.