Spread betting is a speculative form of investing that is popular around the world. However, in the United Kingdom, spread betting is especially popular due to some very favorable circumstances that we’ll talk more about in a second. First, we want to clear a few things up regarding spread betting since there seems to be a lot of confusion about it among traders.
What is spread betting?
As mentioned, spread betting is a speculative form of investing where your task is to predict whether the price of an underlying asset will increase or decrease within a predetermined time frame. It’s very similar to CFD trading with a few important differences.
For each point the asset moves in the right direction, you make 100% of your investment, and for every point it moves in the wrong direction, you lose 100% of your investment.
Let’s say you invest $10 in an asset trading for 2,000 and you predict that it will increase in value. If that asset increases to 2,005 you’ve made $50 (10 X 5) but if it decreases to 1995 you lose $50.
As you can imagine there is a potential to make a lot of money in a short period of time, although the risk is also quite high.
To make things even more interesting, spread betting in the UK is always leveraged which means your potential profits and losses are much higher than the initial investment.
Learn everything you need to know about spread betting by clicking the link!
Benefits of Spread Betting
There are many benefits to spread betting. For example, it’s easy to understand and even easier to get started with, especially if you use the best spread betting platforms in the UK.
Naturally, the high potential payouts are another great benefit that attracts a lot of people as well as the fact that it can be applied to pretty much any underlying asset from commodities and cryptocurrencies to stocks and exchange-traded funds.
However, for people residing in the United Kingdom and a couple of other jurisdictions in the world, there is another even greater benefit which we’ll talk about below.
Tax-free Spread Betting in the UK
Now to the million dollar question that we often get asked. Is spread betting tax-free in the UK?
Yes, unlike other forms of trading, spread betting is, in fact, tax-free in the UK. The reason for this is that spread betting isn’t classified as trading but as betting, and betting is tax-free.
But what exactly does tax-free mean?
Well, spread betting is not subject to stamp duty or any form of capital gain tax. In other words, all the profit you make is yours to keep, and none of it goes to the government.
This is really incredible, and it is definitely the reason why spread betting is more popular in the UK than other places in the world. For everyone else that has to pay taxes on all of their profits, CFD trading and regular forex trading are more common.
CFD trading and spread betting are very similar – almost identical – but in many ways, CFD trading can be a bit less restricting. Unless you live in the UK of course since you have to pay taxes on CFD trading, but not spread betting. Spread betting also have some similarities with Binary Options.
This setup has resulted in a situation where most spread betting companies are based in the UK since few other markets really have an interest in it.
In the section below, we’ll talk more about the best spread betting companies in the UK and give recommendations for the best spread betting brokers.
Best Spread Betting trading platforms UK
Would you like to get started with spread betting? Then we can help point you in the right direction.
Today, there are only a few companies that only offer spread betting due to the small market size. Unfortunately, most of these companies aren’t really reliable either. So instead of using a British spread betting company, we suggest you use a CFD and forex broker that also offers spread betting.
Below you will learn about the three best spread betting platforms in the UK with clickable links that will direct you straight to our comprehensive broker reviews.
Spread Betting in the UK with IG Markets
IG Markets is a well-established British CFD and forex broker that has been around for several decades. They have made a name for themselves as an innovative leader and a stable point in an otherwise quite rocky industry. In addition, they offer one of the better spread betting platforms in the UK.
Spread Betting with ETX Capital
Just like IG Markets, ETX Capital has been around for several decades. In fact, ETX Capital has been serving the investment market since the 1970’s. Besides offering a great CFD and forex trading platform, ETX Capital has developed a good spread betting platform.
CMC Markets and Spread Betting in the UK
CMC Markets is not as well-established or as large as the two brokers mentioned above. Although, they do rival them both when it comes to the quality of their spread betting service. CMC Markets’ platforms are all well-designed and easy to use, and this broker is a great option for anyone looking for spread betting in the UK or elsewhere.
Spread betting and CFD demo accounts
For anyone interested in trying out spread betting, set up a demo account with the brokers above. The will all offer you a free demo account to try out their platforms. Same goes for CFD trading.
- eToro demo account
- Avatrade demo account
- Plus500 demo account
- IQ Option demo account
- Markets.com demo account
The brokers above all offer great CFD trading demo accounts. Enough about that, lets talk more about spread betting in the UK.
That’s How Spread Betting in the UK Works
Spread betting is a popular form of investment and a great complement to your regular forex trading. You can spread bet pretty much anywhere in the world, but there are some obvious benefits of spread betting in the UK.
Since spread betting has been classified as betting and not as trading or investing, spread betting is tax-free in the UK. That’s right, you don’t have to pay stamp duty or any other taxes on your profits from spread betting.