🏦 Brokers·intermediate

Spread Betting

A UK-specific way to speculate on price movements of financial markets — treated as gambling, so profits are tax-free in the UK.

Spread betting is a form of financial speculation unique to the UK and Ireland. You bet a certain amount per pip (or per point for indices) on whether a market will rise or fall. If you're right, you win your stake multiplied by the pips moved. If you're wrong, you lose your stake multiplied by the pips moved. The critical UK advantage: spread betting profits are classified as gambling winnings, not capital gains, which means they're TAX-FREE in the UK. This has made spread betting extremely popular among UK retail traders. The same trade taken as a CFD would be subject to capital gains tax. Functionally, spread betting is nearly identical to CFD trading. Same leverage, same pricing, same brokers usually offer both. The only differences are the legal classification, the tax treatment, and the stake-per-point pricing model instead of lot sizes.

Real trade example

UK-based retail traders routinely net 6-figure annual spread betting profits entirely tax-free. A profitable CFD trader making £100k in the UK would owe £20k+ in capital gains tax — spread betting eliminates that entirely.

Related terms

CFD (Contract for Difference)

beginner

A derivative contract where you profit or lose based on the price movement of an underlying asset — without owning the asset itself.

Broker

beginner

The company that gives you access to the forex market — the middleman between you and the currency you want to trade.

Leverage

beginner

Borrowed money from your broker that lets you control a large position with a small deposit.

FCA (Financial Conduct Authority)

beginner

The UK's top-tier financial regulator — one of the strictest and most respected in the world for forex and CFD brokers.

Spread

beginner

The difference between the buy (ask) and sell (bid) price — your cost of entering a trade.

STP Broker

intermediate

A broker that routes orders straight through to liquidity providers without dealer intervention — similar to ECN but less transparent.

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