In plain English
What Spread betting means
A client chooses whether a quoted market will rise or fall and sets a stake, such as £5 per point. The provider quotes bid and offer prices, and the result depends on the number of points moved between opening and closing prices. Financial spread bets can reference indices, shares, currencies or commodities. They are typically over-the-counter products and may be leveraged.
Why it matters
Spread betting and a conventional CFD can create economically similar leveraged price exposure, but their legal classification and tax treatment can differ by jurisdiction and circumstances. In the UK, HMRC guidance says gambling or wagering profits and losses for individuals are generally outside Income Tax, while noting exceptions such as commercial hedging. Personal tax outcomes require current, individual advice.
Example
A trader stakes £4 per point on a market at 7,500 and takes a long position. If the relevant closing price is 7,535, the simplified profit is 35 × £4 = £140. If it closes at 7,465, the loss is 35 × £4 = £140, before financing, spreads and any other charges.
Quick answers
Common questions
Is spread betting the same as a CFD?+
They are closely related derivatives and may provide similar price exposure. Under the FCA glossary, a spread bet is a contract for differences that is a gaming contract, but contractual structure and tax treatment can differ.
How is spread-betting profit or loss calculated?+
It is generally the point movement between opening and closing prices multiplied by the agreed stake per point. The applicable bid or offer price, spread, financing and fees can affect the final result.
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