Financial spread betting lets UK and Irish residents speculate on price moves in indices, forex, shares and commodities by betting an amount per point of movement (for example £5 per point on the FTSE 100). You don't own the asset, you can go long or short, and you trade on margin under FCA leverage limits. For most UK individuals, profits are free of Capital Gains Tax and stamp duty, but losses can't be offset against other gains, and most retail accounts lose money.
Spread betting is a UK-specific way to trade with leverage. It's popular because of its tax treatment, but that tax advantage only matters if you make money, and most retail spread betting accounts don't. Here's how it works.
How a spread bet works
- Your provider quotes a bid and offer (the spread) on a market, for example FTSE 100: 8,000 / 8,001.
- You choose direction (buy if you think it will rise, sell if you think it will fall) and a stake per point.
- Your profit or loss = stake × points moved.
Example: buy the FTSE 100 at 8,001 at £5 per point. It rises to 8,061: +60 points × £5 = £300 profit. If it falls to 7,961: −40 points × £5 = £200 loss.
Margin and FCA leverage limits
You only deposit margin, a fraction of the position's value. FCA rules cap leverage for retail clients:
| Market | Max retail leverage | Margin |
|---|---|---|
| Major currency pairs | 30:1 | 3.33% |
| Non-major FX, gold, major indices | 20:1 | 5% |
| Other commodities, minor indices | 10:1 | 10% |
| Individual shares | 5:1 | 20% |
Crypto derivatives are banned for UK retail clients. Retail clients also get negative balance protection (you can't lose more than your account balance) and a margin close-out rule that starts closing positions when equity falls to 50% of required margin.
Score the Setup Before You Take It
TRADZY's Void Engine rates any setup 0–100 across 12+ variables: structure, trend alignment, volume, momentum and key levels.
Score a Setup Free →Tax treatment
For most UK individuals, spread betting profits are treated as gambling winnings:
- No Capital Gains Tax on profits.
- No stamp duty.
- Losses can't be offset against other capital gains.
If spread betting is your main source of income, HMRC could view it differently. Tax treatment depends on individual circumstances and can change, so get advice. Compare capital gains tax on trading in the UK and the Stocks and Shares ISA.
Costs
- The spread on every trade.
- Overnight financing on positions held past the daily cut-off, which is expensive for long holds.
- Guaranteed stop premiums if you use guaranteed stops.
- Market data or inactivity fees at some providers.
Spread betting vs CFDs
| Spread betting | CFDs | |
|---|---|---|
| Unit | Stake per point | Number of contracts or units |
| UK tax | Generally no CGT | CGT applies, but losses can offset gains |
| Stamp duty | None | None |
| Availability | UK and Ireland | UK, EU, Australia and more |
| Currency | Usually GBP | Market's currency |
CFD details in CFD trading explained.
The risk picture
UK providers must disclose the share of retail accounts that lose money, and it's typically between 60% and 80%. The main causes: leverage, no stop discipline, and holding losing positions while financing costs pile up.
Rules for spread betting responsibly
- Size by stop, not margin. Stake = (account × risk %) ÷ stop distance in points. For example, £5,000 × 1% = £50 risk, with a 25-point stop, gives a £2 per point stake.
- Always use a stop, and consider guaranteed stops around high-risk events.
- Watch overnight financing on trades held for weeks.
- Avoid trading around major news unless it's part of your plan. See the news trading strategy.
- Journal everything.
TRADZY's TradLog works with spread bets. Record the stake per point and stop distance, and it converts everything to R so you can compare spread betting results with your ISA trades.
FAQ
Is spread betting tax-free in the UK?
For most individuals, spread betting profits are free of Capital Gains Tax and stamp duty. Losses can't be offset against other gains, and HMRC treatment can differ if it's your main income.
Is spread betting gambling?
Legally it's classed as a bet for tax purposes, but it's regulated by the FCA as a financial product. Whether it behaves like gambling depends on your process and risk control.
Can you lose more than you deposit with spread betting?
UK retail clients have negative balance protection, so you can't lose more than your account balance. You can lose your whole balance.
Who can spread bet?
Residents of the UK and Ireland, through FCA-regulated or Irish-regulated providers. It isn't available in the US.
What is the difference between spread betting and CFDs?
Both are leveraged derivatives. Spread bets use a stake per point and are generally free of UK CGT. CFDs are traded in units and subject to CGT, with losses deductible.
Put This Into Practice
- Score your next setup 0–100 with the Void Engine before entering
- Log the trade and tag the setup in the TradLog
- Review weekly: keep what pays, cut what doesn't
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Educational content, not financial advice. Trading involves substantial risk of loss.