WhichBrokerThe short version
Spread betting and CFDs are the same trade wearing different regulatory clothes: both let you take a leveraged position on a price without owning the underlying asset, under the same FCA leverage caps and the same negative balance protection. The difference that actually matters is tax, and it only matters if you are a UK tax resident.
Spread betting profits are free of capital gains tax and stamp duty. HMRC classifies spread betting as gambling, not investing, so gains sit outside the CGT regime entirely, with no need to report them on a tax return. CFD profits are taxable, after the 2026/27 annual exempt amount of £3,000, at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. That looks like spread betting simply wins, until you lose money.
The catch: what happens to your losses
HMRC’s own guidance draws a sharp line. Under CG56105, no allowable loss arises from spread betting — a losing year cannot be set against gains elsewhere in your portfolio, because the product is not inside the capital gains system in either direction. Under CG56100, a CFD closed at a loss produces an allowable loss, which can offset gains on shares, funds or anything else subject to CGT that tax year, or be carried forward.
This is the real trade-off, and it depends on something you cannot know in advance: whether you will be net profitable. A trader confident in their edge, with no other capital gains to shelter, takes the spread betting route and keeps every pound of profit. A trader who also invests in a taxable brokerage account, and who might reasonably have a losing year on short-term trading, has a real use for CFD losses that spread betting cannot offer.
Same leverage, same protection, different market access
Retail leverage limits are identical for both products under FCA rules: 30:1 on major forex pairs, 20:1 on major indices, 10:1 on commodities and 5:1 on individual shares, with negative balance protection meaning your account cannot go below zero and a 50% margin close-out rule that shuts a position before losses can run away. Neither product is inherently riskier than the other at the regulatory level; the risk comes from the leverage you choose to use within those limits, which is identical either way.
Where they diverge is who offers them and to whom. Spread betting is a UK and Ireland-specific product: IG (the market pioneer, LSE-listed), CMC Markets (also LSE-listed, FCA reference 173730) and Spreadex (FCA-regulated, £0 minimum deposit) are the names most UK traders recognise. None of the CFD brokers we score on this site, including Trading 212, Pepperstone and IC Markets, offer spread betting; they offer CFDs, which are available to traders outside the UK and Ireland as well as within it. If your trading plan involves living abroad, trading from a non-UK entity, or simply wanting a broker with a global client base, CFDs are the only option between the two.
A worked comparison
Take a trader who makes £10,000 of profit on index trades in a tax year, with no other capital gains or losses.
| Spread betting | CFD | |
|---|---|---|
| Tax on the £10,000 gain | £0 | £3,000 exempt, then 18% or 24% on the rest: roughly £1,260 to £1,680 |
| Self-assessment reporting | Not required | Required if above the reporting threshold |
| A £4,000 loss the same year, instead | Not usable elsewhere | Offsets other capital gains, now or in future years |
| Available outside UK/Ireland | No | Yes |
The spread betting column only stays empty if the £10,000 is actually a gain. Flip the sign and a CFD trader keeps a loss that can reduce a future tax bill, while a spread bettor’s loss simply disappears from the tax system in both directions.
Who actually chooses which
In practice, three groups gravitate to each side. UK-resident day and swing traders with a demonstrated edge tend to prefer spread betting, because the tax saving compounds every winning year with no downside unless they also hold other investments they would want to shelter losses against. Active traders with a broader portfolio, who also invest in shares or funds and want the option to offset a bad trading year against other gains, tend to prefer CFDs despite the tax on profits. Anyone outside the UK and Ireland has no choice at all: CFDs are the only one of the two available.
Verdict
Neither product is cheaper or safer by design; the leverage limits and protections are the same. The decision comes down to your tax residency, whether you expect to be consistently profitable, and whether you want the option of offsetting a loss against gains elsewhere. If you want to compare the CFD side properly, Best Trading Platforms UK ranks the FCA-regulated platforms by what they actually cost, and Trading 212 vs Pepperstone is a reasonable place to start if you have decided CFDs are the right product for you.
Perguntas frequentes
Is spread betting really tax-free in the UK?
Yes, for UK tax residents. HMRC treats spread betting as gambling, so profits are free of capital gains tax and no stamp duty applies to opening a position, and you do not declare it on a self-assessment return. The trade-off is in HMRC's own rule CG56105: a spread betting loss is not an allowable loss, so you cannot offset it against other gains the way you can with a CFD loss under CG56100.
Do spread betting and CFDs have different leverage limits?
No. Both fall under the same FCA rules (COBS 22.5): up to 30:1 on major currency pairs, 20:1 on major indices, 10:1 on commodities and 5:1 on individual shares for retail clients, with negative balance protection and a 50% margin close-out rule on both. The products are regulated as equivalent risk; the difference between them is entirely in tax treatment and market access, not in how much you can lose.
Can I spread bet through Trading 212, Pepperstone or IC Markets?
No. Spread betting is a UK and Ireland-specific product offered by specialist and multi-product providers such as IG, CMC Markets and Spreadex. The CFD brokers we score, including Trading 212, Pepperstone and IC Markets, offer CFDs rather than spread bets. If spread betting's tax treatment is what matters to you, you will need an account with a provider that offers it alongside, or instead of, CFDs.
Which is better for a UK trader, spread betting or CFDs?
Spread betting usually wins for a profitable UK trader with no other capital losses to offset, because the tax saving on gains is immediate and total. CFDs usually win for anyone trading markets or instruments a spread betting provider does not list, anyone outside the UK or Ireland, and anyone who expects losing years they would rather set against other capital gains.