FX & CFDs · UK guide

Spread Betting vs CFDs in the UK

Same markets, the same leverage rules, very different tax. A plain-English guide for UK traders, with a margin and risk calculator built on the FCA's limits.

Checked September 2026 · 2026/27 tax year · General information, not tax or financial advice
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The short version

Both let you trade the price of a market, such as GBP/USD or the FTSE 100, without owning it, and both use leverage. The differences are in how you size a trade and how it's taxed.

Spread bettingCFDs
How you size a tradeA stake in pounds per point, e.g. £2 per pointA number of units or lots, in the market's own currency
Profits and taxNo Capital Gains Tax or income tax for most UK residentsCapital Gains Tax at 18% or 24% on gains above the £3,000 annual allowance
Losses and taxCan't be set against other gainsCan be offset against other capital gains, and carried forward if reported
Stamp dutyNoneNone
Leverage limitsIdentical. The FCA's rules cover spread bets and CFDs in exactly the same way.
Who can use itUK and Irish residentsWidely available, including outside the UK
Main costsThe spread, plus overnight funding on positions held past the closeThe spread (or commission on shares), plus overnight funding

The same trade, both ways

You think the FTSE 100 will rise from 10,000, and it goes to 10,050: a move of 50 points.

As a spread bet

Stake£5 per point
Position size£50,000
Margin at 20:1£2,500
Profit50 × £5 = £250
Tax on the profitNone

As a CFD

Size5 units (£1 per point each)
Position size£50,000
Margin at 20:1£2,500
Profit50 × £5 = £250
Tax on the profitCounts towards your £3,000 allowance

The trade itself is identical: same exposure, same margin, same risk. If it had fallen 50 points instead, both would lose £250. The only real difference is what happens at tax time.

Is spread betting really tax-free?

For most UK residents, yes. HMRC treats spread betting as betting, so profits sit outside Capital Gains Tax and income tax. There are two catches worth knowing.

It works both ways. Because a spread bet isn't an investment for tax purposes, a losing spread bet gives you no tax loss. You can't set it against gains on shares, property or anything else. A CFD loss, reported on your tax return, can be.

It's rarely treated as a business. HMRC's guidance is that spread betting isn't normally a trade, and simply being full-time or profitable doesn't change that on its own. Unusual cases, and anything done through a limited company, can be treated differently.

The honest point most guides skip. UK brokers are required to publish how many of their retail accounts lose money, and the figure is typically somewhere between 70% and 80%. If you end up on the losing side, being able to offset those losses (CFDs) is worth more than tax-free profits you didn't make (spread betting). And if your yearly profits stay under £3,000, the tax difference is zero either way. For many people the better question is simply which broker has the lowest costs for the markets they trade.

FCA leverage limits

For retail clients, these are the maximums a UK-regulated broker can offer, for spread bets and CFDs alike. Leverage of 30:1 means you put up 3.33% of the position as margin.

MarketMax leverageMinimum marginExamples
Major currency pairs30:13.33%Any two of USD, EUR, GBP, JPY, CAD and CHF: EUR/USD, GBP/USD, USD/JPY, EUR/GBP, GBP/JPY
Other currency pairs, gold and major indices20:15%AUD/USD, NZD/USD, gold, FTSE 100, DAX, S&P 500, Nasdaq 100, Dow
Other commodities and smaller indices10:110%Oil, silver, natural gas
Individual shares5:120%Apple, Barclays, Tesla
CryptoNot available. The FCA has banned crypto CFDs and spread bets for retail clients since January 2021, and in 2026 confirmed that ban stays.
The one that catches people out. AUD/USD and NZD/USD are among the most traded pairs in the world, but for these rules they don't count as "major", because the Australian and New Zealand dollars aren't on the list. So they're capped at 20:1, not 30:1, while a cross like GBP/JPY gets the full 30:1.

Margin and risk calculator

See what a trade really commits you to before you place it. Margin is shown at the FCA maximum leverage; your broker may ask for more.

Max leverage:
An example price is filled in. Change it to the current price.
Margin needed–
Position size–
Value of a 1-point move–
Loss if your stop is hit–
Leverage on your account–

Point sizes for gold and oil vary between brokers (some quote gold per 10 cents), so check your broker's contract details. Stops can slip past their level in fast markets or over a weekend gap unless they're guaranteed. For sizing a trade from your risk, see the trading calculators.

Protections you get with a UK broker

What the FCA requires

Negative balance protectionYou can't lose more than your account
Margin close-outPositions closed at 50% of required margin
No sign-up bonusesCash or gift incentives to trade are banned
Risk warningThe % of retail accounts that lose money

Before you open an account

Check the FCA register. Search the firm's name and reference number on the FCA register, and make sure the website and phone number match. Scammers regularly clone real firms.

Read the costs. Compare spreads on your markets (especially around news), overnight funding rates and the price of guaranteed stops.

Where these protections don't apply. Offshore brokers advertising 1:500 leverage aren't FCA-regulated, so none of the above applies, including negative balance protection. Choosing to be treated as a "professional client" also removes most of it. And prop firm accounts aren't spread bets or CFDs at all: you pay a fee for a simulated account, which isn't covered by these rules.

So which should you use?

Spread betting tends to suit UK residents who expect their profits to go above the £3,000 allowance, and who like sizing trades in simple pounds per point.

CFDs tend to suit traders outside the UK, anyone who wants losses to count against other gains, and those who prefer commission-based pricing on shares.

For many people starting out the tax difference is zero, so choose on costs and on the quality of the broker. And if you're not yet consistently profitable in a demo account, the most useful protection isn't a tax rule: it's trading small.

Risk warning: CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail accounts lose money when trading them. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money. Satdish provides education, not financial advice.
Sources: FCA policy statement PS19/18 and COBS 22.5 (leverage limits and protections for CFDs, spread bets and rolling spot forex); FCA statements on crypto derivatives (2020 and 2026); HMRC guidance on spread betting and Capital Gains Tax rates for 2026/27. Tax treatment depends on your circumstances and can change. If you're unsure, speak to an accountant.