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SPREADBETTING & CFD's

Spreadbetting & CFD's.

Spread betting is a derivative strategy, in which participants do not own the underlying asset they bet on, such as a stock or commodity. Rather, spread bettors simply speculate on whether the asset's price will rise or fall, using the prices offered to them by a broker. Contracts For Difference (CFD) is a popular form of derivative trading. CFD trading enables you to speculate on the rising or falling prices of fast-moving global financial markets, such as forex, indices, commodities, shares and treasuries.

Both financial instruments are typically used to make short term trades based on whether you think the price of the asset is going to go up or down.

Taxing CFD's & Spreadbetting.

Trading CFD's you do not own the underlying asset in which you are trading menaing there is no Stamp Duty to pay. You could, however be subject to Capital Gains Tax (CGT)  if you go over your CGT threshold for the year which is £12,300 or £6,150 for trusts.

Spreadbetting isnt taxable through Capital Gains Tax as it is classed as a form of gambling, however you be liable to pay income tax if you are living off the profits made from spreadbetting as it is then classed as a trade.

Risk.

Spread Bets & CFD's are complex financial instruments that are very high risk. It is important to understand that you can quickly lose your initial investment so it is cruical that you have enough money to live off even if you lose your initial investment.

It is helpful to note that training tools and simulated accounts when no real funds or money is involved, will not fully replicate your own behaviour and attitude when it comes to actually using your own money.