Spread betting in the UK

Every spread bet you place involves choosing a cash stake in pounds for each point a market price moves. You buy the market when you expect the price to rise. You sell it instead if you think it'll fall. Your profit or loss comes from your stake multiplied by how many points the price moves for you or against you.

Under the FCA Handbook, a spread bet is both a contract for differences and a gaming contract within the Gaming Act 1968. With a contract for differences, you agree with a broker to settle in cash how a share or asset's price changed, without owning it. Your bet is on price movement, not on buying the asset itself, so the only money that changes hands is the cash difference. Our guide to what spread betting is takes you through a complete bet, and our CFDs vs stocks page sets derivative contracts against shares.

Opening and closing a bet means paying your main trading cost through the spread. Your screen shows the broker's buy price and the sell price. The gap between them is the spread. The buy price sits slightly above the sell price, so your bet opens at a small loss until the market moves enough for you to break even.

Other account charges can also cut into your return on spread betting forex, indices or company shares. The FCA retail loss figure rules require a broker to include every cost, fee, commission and any other charge when it works out the share of its retail accounts losing money over the previous 12 months. Our spread betting vs CFD page shows how spread pricing compares with commission accounts.

In 2019, the FCA restricted how firms sell and market contracts for differences and leveraged spread bets to retail clients. Leverage lets you control a large market position with a small deposit, which multiplies your gains and your losses. Margin is the cash deposit your broker locks up in your account to keep a leveraged bet open.

Every FCA regulated provider selling leveraged spread bets must show the standardised CFD risk warning on its website and promotions. That warning gives the exact percentage for retail accounts losing money with that firm, refreshed every 3 months for the preceding 12 months.

Don't let a broker reclassify you as an elective professional client, the FCA has warned, because you'd then give up these retail safeguards. Moving to professional status lifts the leverage caps and can allow your funds to be moved out of segregated client money accounts. You should also watch for firms sending UK retail clients to associated providers based in third country jurisdictions that lack equivalent consumer protections. Our FCA regulated forex brokers page shows you how we check that a firm is authorised.

The basic position, set out by HMRC in section BIM22015 of the Business Income Manual, is that betting and gambling don't count as trading. Placing a spread bet doesn't normally mean you're carrying on a trade, so there's no tax on your profits and no tax relief for your losses. Instead, tax applies to the business profits of the bookmaker running the spread bet.

BIM22020 points out that exceptions can apply when spread betting wins come from carrying on an existing trade, depending on the contract terms and on the economic substance of what happens. For ordinary private punters, profits stay outside Capital Gains Tax and Income Tax, and our pages explain the full rules: tax free spread betting and UK spread betting tax.

An FCA authorised trading firm may offer CFD and forex accounts without also offering a spread betting UK account. The brokers we cover that provide financial spread betting include ActivTrades, Capital.com, CMC Markets, FxPro, IG, Pepperstone, Spreadex and Vantage.

Those providers all work with TradingView, plus their own web and mobile apps. FxPro Edge covers spread betting, and the Spreadex platform is another example. Most of them connect to MetaTrader platforms too, and offer a forex demo account so no real money is at risk while you practise. Our spread betting companies page lets you put their account terms side by side.