Been trading CFDs for a while but keep hearing mixed things about spread betting.
Tax implications seem different and I’m wondering if I should make the switch. What do you guys actually prefer in practice?
CFDs usually win once you’re trading regularly. Those wider spreads in spread betting kill you fast.
I track my actual costs monthly - CFDs beat spread betting even after taxes. The tax savings sound great but don’t mean much when spreads eat your profits.
Try both with small positions and see what works for how often you trade.
Spread betting only makes sense if you hate paying taxes.
Your location matters. In the UK, spread betting has a tax advantage since winnings are tax-free, unlike CFDs which incur capital gains tax. If you are outside the UK, CFDs are generally your option as spread betting may not be available. Although spread betting has wider spreads, the tax benefits can offset those costs if you’re profitable. Assess your trading volume and expected gains to decide which option suits you better considering your tax situation.
Stick with CFDs if you’re already comfortable. Switching isn’t worth the hassle unless you’re making serious money.
Both options are effective, but I lean towards CFDs. The costs are more transparent, and you understand your spread payments clearly.
While spread betting might offer tax benefits depending on your situation, those wider spreads can cut into your profits more than you anticipate.
If your main concern is taxes, consider spread betting. Otherwise, CFDs typically offer better pricing.
CFDs have clear costs spread betting offers potential tax benefits
I’ve used both - it really depends on your style and profits.
Started with spread betting because everyone said “tax free gains.” Reality hit when I saw those wider spreads killing me on frequent trades. Was paying 2-3 pips extra per trade vs CFDs.
Switched to CFDs with IC Markets - night and day difference. Way tighter spreads, especially majors. Yeah, you pay capital gains tax, but if you’re not making huge profits yet, 20% tax on smaller gains beats losing money to inflated spreads every trade.
Now I only use spread betting for longer positions where I expect bigger moves. Tax advantage actually matters there since wider spreads get absorbed by larger movements.
Track your trading costs for a month, then calculate what the same trades would cost with each option including taxes. That’s your real answer.