How to spread bet on shares
Spread betting on shares lets you speculate on a company's share price without owning the stock. Profits are free from capital gains tax and stamp duty in the UK, and leverage means a smaller deposit controls a larger position. This guide explains how share spread betting works, how it is priced and how it compares to buying shares directly.
What is spread betting on shares?
When you spread bet on shares, you place a trade based on whether you expect a share price to rise or fall. You do not own the underlying shares: you are speculating on the price movement. Your profit or loss is calculated by multiplying your stake in pounds per point by the number of points the share price moves from the time you open to when you close the trade.
This is the key distinction from buying shares directly. In a share dealing account, you own the shares and benefit from dividends and shareholder rights. With a spread bet, you hold a leveraged derivative position. You can go long if you expect the price to rise, or short if you expect it to fall, a flexibility that direct share ownership does not offer without additional complexity.
How share spread bets are priced
A spread betting provider quotes a buy price and a sell price around the underlying market price of the share. The difference between the two is the spread, which is the primary cost of the trade. There is no separate dealing commission, and no stamp duty is charged since you do not take ownership of the shares.
For UK-listed shares, one point typically represents a one penny movement in the share price. For US shares, one point represents a one cent movement. If you bet £5 per point on a UK stock and it moves 50 points (50p) in your favour, your profit is £250. If it moves 50 points against you, your loss is also £250, before overnight funding charges.
Spread betting on shares: key facts
£0
Commission charged on share spread bets. The cost is built into the spread
0%
Capital gains tax on spread bet profits for most UK residents
20%
Typical margin rate for UK individual shares (FCA minimum for retail clients)
Spread betting on shares vs buying shares
| Feature | Spread betting | Buying shares directly |
| Ownership | No. You hold a derivative position | Yes. You own the shares |
| Tax | No CGT or stamp duty on profits | CGT above £3,000 allowance; 0.5% stamp duty on UK shares |
| Leverage | Yes. 20% margin for individual shares | No. Full price paid upfront |
| Short selling | Fairly simple | Complex; requires borrowing shares |
| Dividends | Dividend adjustment made to position | Dividends paid as cash to shareholder |
| ISA eligible | No | Yes |
| Overnight funding | Yes, charged on open positions | No ongoing cost to hold |
The tax advantage is significant for higher-rate taxpayers: spread bet profits are outside the scope of capital gains tax for most UK residents, and there is no stamp duty. This makes spread betting particularly attractive for shorter-term tactical positions. However, for long-term wealth building, holding shares directly in a stocks and shares ISA provides compounding tax-free returns on both capital gains and dividends.
Key Takeaway
Spread betting suits shorter-term traders who want leveraged, tax-efficient exposure to share price movements in both directions. Buying shares directly suits long-term investors who want ownership, dividends and ISA eligibility. Both approaches are available through us from a single account.
How to spread bet on shares
1. Open a spread betting account
You will need a spread betting account rather than a share dealing account. We offer both from a single account login. If you are new to spread betting, a demo account allows you to practise with £10,000 of virtual funds before risking real capital.
2. Choose your share and direction
Search for the company you want to trade. Review the current price, our quoted spread, and the margin requirement. Decide whether you want to go long (buy) if you expect the price to rise, or short (sell) if you expect it to fall.
3. Set your stake
Your stake is the amount you want to bet per point of price movement. A £5 per point stake on a UK share means you gain or lose £5 for every penny the share price moves. Choose a stake size that reflects your risk tolerance, and check the total margin required to open the position before confirming.
4. Manage your risk
A stop-loss order automatically closes the position if the market moves against you by a specified amount. A guaranteed stop ensures execution at the exact stop level even if the market gaps. Set your stop-loss before you open the trade, not after. The spread betting explainer covers risk management in full.
5. Close the position
When you are ready to take your profit or cut your loss, close the position by placing an opposing trade. Your profit or loss is calculated from the opening price to the closing price, multiplied by your stake.
Spread betting on upcoming share listings
Spread betting is also used around upcoming IPOs and new listings, where traders want to take a position on a company's shares before or after they begin trading on an exchange. We currently offer spread betting on a number of anticipated listings including Shawbrook Bank and Revolut. New listings can see significant volatility in early trading, making leverage and the ability to go short particularly relevant for traders navigating those initial price discovery sessions.
How does leverage work on share spread bets?
Leverage means you only deposit a fraction of the full trade value to open a position. For individual UK shares, the FCA minimum margin rate for retail clients is 20%. This means a position worth £10,000 requires a £2,000 deposit. Your profit and loss, however, are still calculated on the full £10,000.
This amplifies both gains and losses. A 5% move in the underlying share represents a 25% gain or loss on your margin. This is why position sizing and stop-loss orders are critical in share spread betting. You can lose more than your initial deposit, though negative balance protection means retail clients cannot lose more than the total funds in their spread betting account.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with us. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
For a broader comparison of how spread betting and CFD trading work, both products offer leveraged share exposure, but they differ in tax treatment: spread bet profits are typically CGT-free, while CFD profits may be subject to capital gains tax.
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Spread betting on shares FAQs
Is spread betting on shares tax free?
For most UK residents, spread betting profits are free from capital gains tax and stamp duty. No stamp duty applies because you do not take ownership of the underlying shares. Tax treatment depends on individual circumstances and may change.
What shares can I spread bet on?
With us, you can spread bet on over 13,000 shares including UK, US, European and Asian stocks. We offer individual share spread bets, as well as spread bets on stock indices and ETFs for broader market exposure.
How much do I need to open a share spread bet?
The minimum deposit depends on the share's price and the margin rate. For individual UK shares, the FCA minimum margin for retail clients is 20%. A position worth £1,000 requires a £200 deposit. You can lose more than this if the market moves against you.
What is the difference between spread betting and CFD trading on shares?
Both provide leveraged exposure to share prices without ownership. Spread betting profits are typically free from capital gains tax for UK residents. CFD profits may be subject to CGT. Spread bets are quoted in pounds per point; CFDs in contract units. Both carry the same FCA margin requirements.
Can I short shares using spread betting?
Yes. Going short is one of the primary advantages of spread betting over buying shares. If you expect a share price to fall, you place a sell trade. Your profit increases as the price falls. Losses increase if the price rises.
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
The value of shares, ETFs and other ETPs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
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