What are the benefits of spread betting?
Spread betting is a popular form of leveraged trading. Spread betting allows traders to speculate on financial market movements. Like CFD trading, spread betting is an online form of trading and can be accessed via a trading platform. Here we will cover the advantages of spread betting, some of which are unique when placing spread bets.
Spread betting tax
Spread betting’s unique benefit is that it is exempt from both capital gains tax and stamp duty*. When compared to conventional share trading and CFD trading, spread betting is the only trading product to offer tax-free trading in the UK and Ireland.
However, tax is not the only advantage spread betting has to offer, read on to find out more.
Advantages of spread betting
Speculate on falling markets
When you spread bet, you don't physically buy the instrument on which you are taking a position. You instead speculate on whether you expect prices to rise or fall. This means that if you think the price of a particular instrument is going to fall, you can go short (sell) the product and if you think prices are going to rise, you go long (buy).
No stamp duty
Unlike traditional shares trading, you don't have to pay stamp duty when you spread bet because you are not buying the underlying product. Instead, you take a position based on whether you expect the price of that product to rise or fall.
Profits are tax free*
Spread betting profits are exempt from capital gains tax (CGT) in the UK. However, tax treatment depends on individual circumstances and tax laws are subject to change.
Trade using margin
Spread betting is traded on margin (or deposit). Margined trading allows you to do more with your capital – you can open more or bigger positions than you would be able to if you had to fund the full value of the position. For example, if the margin rate for a product is 5%, and you wanted to place a bet worth £200, you would only use £10 from your available account balance to open your position. Remember, however, that spread betting using margin can increase your losses as well as profits as they are relative to the full value of the position.
Risk management
We offer a number of risk-management tools, including stop-loss orders and guaranteed stop-loss orders. A stop-loss order may help you manage your exposure by setting a price level beyond which you are not prepared to risk any more of your capital on a position. When used effectively, a stop-loss order should automatically close your position if the price of the relevant instrument moves against you and reaches the price level where you wish to exit that position.
It's important to remember that regular and trailing stop-losses may not protect you from market gapping or slippage. For 100% certainty that your stop-loss will be executed at the exact price you want, you can use guaranteed stop-loss orders, for a small premium charge. Other risk-management features include trailing stop-loss orders and take-profit market orders. For more details please read our Order Execution Policy on our spread betting legal documents page
Access to thousands of global instruments
Spread betting can be a cost-efficient way to speculate on new markets. We offer prices on thousands of shares, plus currencies, indices, commodities and treasuries from across the globe. View our full range of spread betting markets.
Commission-free trading
Spread betting is exempt from many of the costs that you face when you trade shares with a stock broker. For example, there is no commission, stamp duty or capital gains tax to pay. As a company, we are remunerated through the spread we offer on each product. Learn more about spreads.
24-hour trading
You can spread bet on a huge number of forex pairs 24 hours a day, from Sunday evening through to Friday night. We also offer many indices, commodities and treasuries which are almost tradable around the clock, bar a short break. For example, the UK 100 is available to trade between 1am on Mondays and 9pm on Fridays, apart from two breaks between 9.15pm and 9.30pm, and 10pm to 11pm.
See our spread betting guides to further your learning.
Trade anywhere
You can access our desktop application, online platform and mobile application to spread bet on the go. With cross-device functionality, you can open a trade on your desktop, and close the trade hours later on your mobile device. Our apps also feature fully interactive charts, with over 40 technical indicators. See all of our mobile trading application’s features.
Unique markets
We offer over 10,000 financial instruments that can be accessed with a spread betting account, includng forex, shares, ETFs, commodities, treasuries, cryptocurrencies and indices. We do also have some unique markets offerings such as crypto indices and commodity indices providing efficient and cost-effective exposure to several markets within an asset class.
See our spread betting guides to discover more about what spread betting is and how it works.
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Disclaimer
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
