MoneyPlanIt

Ways to trade and invest · Guide 9 of 11

What Is Spread Betting? A Beginner’s Guide

Last reviewed 2 November 2026Advanced: uses leverage or contractsCovers the UK, US, EU, Australia and Canada

The short version

Financial spread betting means betting a set amount of money for every point a market moves, such as £2 per point on a stock market index. If the market moves your way, you win your stake multiplied by the number of points; if it moves against you, you lose the same way. Like CFDs, spread bets are leveraged, so losses can quickly exceed the deposit you put down. Spread betting is mainly offered in the UK and Ireland.

You get
A bet of a set amount per point of price movement
Typical costs
Spread and overnight financing
Can you lose more than you put in?
Yes, beyond your margin; retail accounts are protected from going below zero
Risk
Very high
  • You choose a stake per point, for example £5. A 40-point move is then worth £200, up or down.
  • You only put down a deposit (margin), but you win or lose on the full position.
  • In the UK, profits are usually free of Capital Gains Tax and stamp duty because it’s treated as gambling, but losses can’t be offset against other gains.
  • The same FCA leverage limits and protections apply as for CFDs.
  • It isn’t available in the US, and isn’t offered in most other countries.

How spread betting works

The provider quotes two prices for a market: a lower sell price and a higher buy price. The gap is the spread, which is where the name comes from and how the provider makes money. You “buy” if you think the price will rise, or “sell” if you think it will fall.

Instead of buying a number of shares, you pick a stake per point. A point is the unit the market moves in: one point on a stock index is one index point, and on many shares it’s a penny. Your profit or loss is simply the number of points the market moves multiplied by your stake.

Tax and how it differs from CFDs

Spread bets and CFDs work in almost the same way, and are covered by the same FCA rules1. The main difference in the UK is tax. HMRC generally treats spread betting as gambling, so for most people profits are free of Capital Gains Tax and Income Tax, and there’s no stamp duty. CFD profits are subject to Capital Gains Tax, but CFD losses can be offset against other gains2.

Tax rules depend on your circumstances and can change. If trading is your main source of income, HMRC may view things differently. In Ireland, spread betting is available but the tax treatment isn’t the same as in the UK, so check with Revenue or a tax adviser.

“Tax-free” sounds appealing, but it only matters if you make a profit, and most spread betters don’t.

What it costs

  • Spread: built into every bet. You start each bet slightly down.
  • Overnight financing: daily bets held overnight are charged interest on the full position value.
  • Guaranteed stop premium: an extra cost if you want a stop loss that can’t be skipped by a gap.
  • Forward or futures-based bets: these have wider spreads but include financing in the price, for longer holds.

The risks

The risks are the same as for CFDs: leverage, gaps, automatic close-outs and costs that grow the longer you hold. A stake that sounds small, such as £10 a point, can be large: a 200-point move in an index is £2,000.

Rules where you live

Products, protections and tax rules differ from country to country. Here’s a summary for the main English-speaking markets. Always check your own regulator for the latest position.

UK
Spread betting firms must be authorised by the FCA. Retail leverage limits, 50% margin close-out, negative balance protection and risk warnings apply exactly as for CFDs13.
Ireland
Spread betting is offered by some firms under EU rules, with the same leverage limits and protections as CFDs. Tax treatment differs from the UK.
US
Not available. Financial spread betting isn’t offered to US residents.
EU (other countries)
Rarely offered. Traders in most EU countries use CFDs instead.
Australia and Canada
Financial spread betting is not generally offered; CFDs are the nearest equivalent where available.

Who it tends to suit

Tends to suit

  • Experienced UK or Irish traders who understand leverage and size bets carefully.
  • Short-term traders who want to go long or short on indices, currencies or shares.

Think twice if

  • Beginners, or anyone who treats it like betting on a match.
  • Long-term investing: financing costs add up.
  • Anyone who couldn’t cope with losing the whole account.

How to get started safely

  1. Learn position sizing and stop losses first, through our lessons.
  2. Use a demo account and convert every stake per point into its full position value before you trade.
  3. Choose an FCA-authorised provider and stay a retail client.
  4. Keep each bet’s maximum loss to a small part of your account.
  5. Check the provider’s published percentage of losing accounts.

Words in this guide

Spread betting
Betting a set amount per point on a market’s price moving up or down.
Stake per point
The amount you win or lose for each point the market moves.
Point
The unit a market moves in, such as one index point or one penny on a share.
Spread
The gap between the buy and sell prices quoted by the provider.
Margin
The deposit needed to open a bet, a percentage of the full position value.
Guaranteed stop
A stop loss that closes your bet at exactly the set price even if the market gaps, for an extra fee.

Frequently asked questions

Is spread betting tax-free in the UK?

For most people, profits are free of Capital Gains Tax and stamp duty because HMRC treats spread betting as gambling. Losses can’t be used to reduce other taxable gains. Tax depends on your circumstances and can change.

What is the difference between spread betting and CFDs?

They work in almost the same way and follow the same FCA rules. Spread bets are priced per point and are usually tax-free in the UK; CFDs are priced per share or unit and are subject to Capital Gains Tax, but losses can be offset.

Can I spread bet from the US?

No. Financial spread betting isn’t available to US residents.

Sources and further reading

Numbers in the guide, like 1, point to these sources. Rules, fees and tax change, so check the latest version before you act.

  1. FCA confirms permanent restrictions on the sale of CFDs and CFD-like options to retail consumers (July 2019) Financial Conduct Authority.
  2. Spread betting vs CFDs: the key tax difference. IG (a spread betting provider).
  3. Leverage and margin limits in the UK. BrokerChooser.

What to read next

Back to top