How are spread bets and CFDs taxed in the UK?
Spread bets and CFDs hold certain tax benefits to some traders in the UK. Learn more about these derivatives and how they are taxed when opening a position with us – the world’s No.1 choice for spread betting and CFD trading.1
Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.
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Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We’re available from 9am to 5pm (UK time), Monday to Friday.
Contact us 0800 409 6789
Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.
Contact us 0800 195 3100
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We’re available from 9am to 5pm (UK time), Monday to Friday.
Contact us 0800 409 6789
What are spread bets and CFDs?
Spread bets and CFDs are derivative products that enable you to open a position using leverage. Spread betting involves staking an amount of money per point of price movement in the underlying asset. CFD trading involves exchanging the difference in price from the point at which the contract is opened to when it is closed. The key difference between spread betting and CFD trading is how they are taxed in the UK.
Leverage can magnify both your profits and losses as they’ll be based on the full exposure of the trade, not just the margin required to open it. This means losses as well as profits could far outweigh your margin, so always ensure you’re trading within your means.
How are spread bets and CFDs taxed in the UK?
Spread betting is tax-free2 for the majority of UK residents. Most people won’t pay Capital Gains Tax (CGT) or stamp duty. This means most people would keep 100% of their profits when spread betting, which isn’t the case when trading CFDs.
CFDs are free from stamp duty, but CGT applies to profit. However, CFDs allow you to offset losses against gains, meaning they can be useful for hedging strategies.
It’s important to note that tax laws regarding spread betting and CFD trading differ from country to country, they depend on your personal circumstances and they are subject to change.
For reference, stamp duty is a form of tax payable (expressed as a percentage of the transaction value) when you buy a specific set of underlying financial assets, and CGT is levied by the government on profits made from these transactions.
The other form of tax that may impact you when you trade derivatives in the UK is income tax. Note that we do not offer any tax advice to our clients. It’s best to consult with a tax advisor about your personal circumstances.
| Spread betting | CFD trading | |
| Ownership of asset | No ownership | No ownership |
| Capital gains tax (CGT) | Profits are exempt, but can’t offset losses against CGT2 | CGT payable on profits, but can be offset against losses2 |
| Stamp duty | No stamp duty payable2 | No stamp duty payable2 |
Derivatives trading tax example: buying 2000 Lloyds shares
To explain how tax could work when trading spread bets or CFDs in the UK, we’ve put together an example based on the assumption that you want to buy 2000 Lloyds Banking Group shares and that you are exempt from stamp duty and CGT where applicable. Note that this example may not be applicable to everyone trading in the UK, as tax is based on individual circumstances and your position may require unique analysis. The table is for illustrative purposes only.
| Spread betting | CFD trading | Share dealing | |
| Underlying share price at open | 43.208p | 43.2p | 43.2p |
| Our buy price at open | 43.258p | 43.21p | 43.3p |
| Our sell price at open | 43.158p | 43.19p | 43.1p |
| Deal | Buy (go long on) 2000 shares at 43.258, betting £20 per point of movement | Buy (go long on) 2000 shares at 43.21 | Buy 2000 shares at 43.3p each |
| Margin factor | 20% | 20% | No margin, full value payable upfront |
| Cost to open | £0.50 (spread) Spread betting charges and fees |
£103 (commission) CFD trading charges and fees |
£84 (commission) Share dealing charges and fees |
| Initial outlay | £173.53(buy price per share x deal size x 20% margin factor + spread) | £182.84 (buy price per share x deal size x 20% margin factor + commission) | £870 (buy price per share x 2000 + commission) |
| Underlying share price at close | 44.308p | 44.3p | 44.3p |
| Our buy price at close | 44.358p | 44.31p | 44.4p |
| Our sell price at close | 44.258p | 44.29p | 44.2p |
| Cost to close | £0.50 | £103 | £84 |
| Capital gains tax | None2 | Subject to CGT, but can be offset against losses2 | Subject to CGT2 |
| Stamp duty | None2 | None2 | £102 |
What else to know about spread betting and CFD trading
- Trade a huge range of markets – choose from over 17,000+ financial markets, including forex, commodities, indices, shares and ETFs
- Make your capital go further with leverage – pay only a small percentage of the full value of the trade to open your position. Note that trading on leverage can increase both profits and losses
- Go long or short – speculate on rising or falling asset prices
- Trade after hours – trade 70 key US stocks out of hours, and get 24/7 pricing on GBP/USD, global indices and more5
Take our free, interactive course
Learn about the advantages of spread betting and CFD trading – and see how you can get started – with IG Academy’s short online course.
Take our free, interactive course
Learn about the advantages of spread betting and CFD trading – and see how you can get started – with IG Academy’s short online course.
1 Based on revenue (published financial statements, 2023).
2 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
3 With share CFDs, we charge a small commission when you open the position, and again when you close it. The charge is 0.10% per share, with a minimum charge of £10.
4 Our best commission rate for UK shares is £3, and it is available to active clients who place three or more trades in the previous month. The normal commission rate is £8. 5 24/7 excludes the hours from 10pm Friday to 8am Saturday (UK time), and 20 minutes just before the weekday market opens on Sunday night.
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