By Ken Chigbo, founder of KenMacro, 18 years trading macro and FX (London floor and institutional desks). Last updated 2026-05-26. Educational only, not financial or tax advice.
In the UK, spread betting profits are free of Capital Gains Tax and stamp duty because HMRC treats spread betting as gambling. CFD profits are CGT-liable (18% or 24% above the GBP3,000 allowance) but, unlike spread bets, CFD losses can be offset against tax. Spread betting can only be offered by FCA-regulated firms.
The instrument you choose decides your tax bill before you place a single trade. Here is the difference in plain terms, including the part nobody covers: what happens if trading is your main income.
The tax difference
Spread betting: profits tax-free for most residents, no CGT, no stamp duty, but losses are not deductible. CFDs: profits taxed under CGT above the GBP3,000 annual allowance at 18% (basic rate) or 24% (higher or additional rate), and losses can be offset against gains and carried forward.
Which suits you
If you are a UK resident, profitable, and want to keep more of it, spread betting is usually the more tax-efficient route. If you expect losing periods you want to offset, trade larger, or want the broadest choice of brokers and platforms, CFDs make sense. Many serious traders use both.
The catch if trading is your main income
People assume going full-time makes spread betting taxable. HMRC guidance (BIM22017) is the opposite: earning a living from gambling does not by itself make it a trade. Highly structured, business-like activity can change the picture, so if it is your sole income, get professional advice rather than guessing.
Where to trade each, for UK traders
Spread betting can only legally be offered to UK residents by FCA-regulated firms. Of the brokers we work with, only Vantage offers a UK spread betting account, alongside CFDs, under its FCA entity.
The FCA-regulated pick
Vantage (FCA, FRN 590299)
Vantage offers UK traders both a tax-free spread betting account and CFD accounts under its FCA licence, on FTSE 100, indices, gold, FX and shares. Authorised by the FCA as Vantage Global Prime LLP, with FSCS protection up to GBP85,000, negative balance protection, and the FCA 1:30 retail leverage cap. It is the one partner we route UK traders to, because it is the one that is actually FCA-regulated.
Affiliate link, at no extra cost to you. Capital at risk. Most retail CFD accounts lose money.
Frequently asked questions
Is spread betting tax-free in the UK?
For most UK residents, yes. HMRC treats spread betting as gambling, so profits are free of Capital Gains Tax and stamp duty. The trade-off is that spread betting losses are not tax-deductible. This is not tax advice and rules can change.
Do I pay tax on CFD profits in the UK?
Yes. CFD profits are subject to Capital Gains Tax above the annual allowance (GBP3,000 for 2025/26), at 18% or 24% depending on your rate band. Unlike spread betting, CFD losses can be offset against gains and carried forward.
Is spread betting still tax-free if it is my main income?
Generally yes. HMRC guidance (BIM22017) says that simply making a living from gambling does not by itself make it a taxable trade. But structured, business-like activity can change that, so take professional advice if it is your sole livelihood.
Which is better, spread betting or CFDs?
If you are a UK resident and tax-sensitive, spread betting is usually more efficient because profits are tax-free. CFDs suit traders who want to offset losses against tax, trade larger size, or use a wider range of brokers. Only an FCA-regulated firm can offer UK spread betting.
This article is for education and information only and is not financial, investment or tax advice. Tax treatment depends on your individual circumstances and may change; confirm with HMRC or a qualified adviser. Trading CFDs and spread betting carries a high risk of rapid loss due to leverage; most retail accounts lose money. FCA protections (FSCS, the Financial Ombudsman, negative balance protection) apply only to FCA-regulated firms, not to offshore entities. KenMacro has commercial partnerships with brokers including Vantage and may earn a commission if you open an account through our links, at no extra cost to you.