Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% 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.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Spread betting vs CFDs

Open a position using just a fraction of the capital – with spread bets and contracts for difference (CFDs). These leveraged products share many benefits, yet each has unique advantages. Discover which could work best for you.

Start trading today. Call 0800 195 3100 or email newaccountenquiries.uk@ig.com. We’re available from 8am to 6pm (UK time), Monday to Friday.

Contact us: 0800 195 3100

Start trading today. Call 0800 195 3100 or email newaccountenquiries.uk@ig.com. We’re available from 8am to 6pm (UK time), Monday to Friday.

Contact us: 0800 195 3100

Why spread bet?

  • No capital gains tax1
  • No commission, just our spread
  • Bet easily in your chosen currency – have greater control of currency exposure
  • Deal on rising and falling markets
  • Leveraged access to the markets
  • No stamp duty
  • 24-hour dealing
  • Use prices based on the underlying market

Why trade CFDs?

  • Direct market access (DMA) on shares
  • Losses can be offset against profits for tax purposes
  • Deal on rising and falling markets
  • Leveraged access to the markets
  • No stamp duty
  • 24-hour dealing
  • Use prices based on the underlying market

Leverage can magnify both your profits and losses as they’ll be based on the full exposure of the trade, not just the margin required to open it. This means losses as well as profits could far outweigh your margin, so always ensure you’re trading within your means.

Spread betting vs CFDs: key differences

The key difference between spread betting and CFD trading is how they are taxed. Spread bets are free from capital gains tax, while profits from CFDs can be offset against losses for tax purposes. You don't pay stamp duty with either product because you don’t take ownership of the underlying assets when you trade.

You can go long or short with both products, though there are technical differences in how they work:

  • Spread betting stakes an amount of money per point of price movement in the underlying asset. For example: if you thought the Ocado share price would rise, you could go long at £50 per point of movement. If the price rose by ten points – equal to 10p – you’d profit £500 excluding additional costs. Conversely, if it fell by ten points, you’d lose £500.
  • CFD trading exchanges the difference in price from the point at which the contract is opened to when it is closed. For example: if you thought the Ocado share price would rise, you could buy 20 share CFDs of Ocado – the equivalent of buying 20 Ocado shares. If the price rose by 10p, you’d profit £200 excluding commission fees. However, if it fell by 10p, you’d lose £200.

All spread bets have a fixed expiry date, while CFDs don’t expire (with the exception of futures).

When it comes to risk, spread bets and CFDs are both leveraged derivatives. Leverage lets you receive full market exposure for an initial deposit, known as margin. While this can help to maximise your potential profits, it can also increase your potential losses.

Before you open a position with spread bets or CFDs, it’s important that you take steps to manage your risk.

Learn more about the impact of leverage on your trading

Take our free, interactive course

Learn about the advantages of spread betting and CFD trading – and see how you can get started – with IG Academy’s short online course.

Take our free, interactive course

Learn about the advantages of spread betting and CFD trading – and see how you can get started – with IG Academy’s short online course.

Is spread betting or CFD trading best for me?

If you’re experienced in the financial markets, both spread betting and CFD trading can bring variety and range to your portfolio. With either product you could see enhanced profits thanks to leverage – though any losses will be accelerated too. See a full comparison in the table below.

Spread betting could be for you if you want to...

  • Take any profits tax-free1
  • Control the size of your deal
  • Deal shares in smaller sizes without being penalised by a minimum commission
  • Trade all international markets in sterling
  • Take a longer term view on forex and shares with forward markets

Learn more about spread betting

CFD trading could be for you if you want to...

  • Find a product that feels similar to trading the underlying market, with the same terminology
  • Use DMA for shares trading, while getting our OTC benefits
  • Offset your losses against profits as a tax deduction
  • Get a corporate trading account
  • Hedge physical assets in your portfolio
  • Use the tax-deductible benefits of CFDs to hedge efficiently

Learn more about CFD trading

CFD vs spread betting: product differences in detail

Spread betting CFD trading
What is it? Placing a bet that allows for a range of outcomes Trading a financial derivative – you deal on prices derived from the underlying market, not on the market itself
Are there expiries? Expiry dates far in the future No expiry dates (excluding forwards)
Do I pay tax? You don’t pay capital gains tax or stamp duty1 You don’t pay stamp duty, but you do pay capital gains tax. However, losses can be offset as a tax deduction
When can I trade? 24-hour dealing on forex and major stock indices. During the underlying market hours for other markets. You can also trade selected markets on weekends 24-hour trading on forex and major stock indices. During the underlying market hours for other markets. You can also trade selected markets on weekends
Do I pay to keep positions open? Overnight funding on daily funded bets. Rollovers on forwards and futures Overnight funding on all markets, except futures. Rollovers on futures
Does IG profit if I lose? We profit mainly from spreads and funding, and hedge the majority of net client exposure. We accept a low level of risk, which means we can make a small profit or loss We profit mainly from commission, spreads and funding, and hedge the majority of net client exposure. We accept a low level of market risk, which means we can make a small profit or loss.
The outcome of a client’s DMA trade never has an impact on our profit or loss
What kind of trading is it suitable for? Intra-day, daily and
medium-term
Intra-day, daily and medium-term
Can I receive dividends? We make a dividend adjustment on equity and stock index spread bets We make a dividend adjustment on equity and stock index CFDs
Can it be used for hedging? Yes, but CFDs can be more effective because of their tax-deductible benefits. Yes
Can I open a corporate account? No Yes, we offer corporate accounts
Range of markets More than 17,000 markets, including:
Forex
Stock indices
Shares
ETFs and ETCs
Metals
Energies
Spot metals
Soft commodities
Options
Interest rates
Bonds
Sectors
Share forwards
Forex forwards
Daily stock index futures
Stock index futures
Daily oil futures
More than 17,000 markets, including:
Forex
Stock indices
Shares
DMA shares
ETFs and ETCs
Metals
Energies
Spot metals
Soft commodities
Options
Interest rates
Bonds
Sectors
Stock index futures
The mechanics of dealing You define the size of your deal by selecting the amount you want to bet per point of movement (£/pt). Profits and losses realised in currency you bet in You define the size of your deal by selecting the number of contracts or shares you want to trade. Each contract has a fixed value. Profits and losses realised in traded market’s base currency. GBP contracts available
The charges A spread on all markets. No commission. Funding adjustments (excluding futures and forwards) A spread on all markets except shares. We charge a commission on share CFDs, but no spread. Funding adjustments (excluding futures)
Dealing platforms Desktop dealing
Mobile app (iPhone, Android)
Tablet app (iPad)
MetaTrader 4
ProRealTime
Desktop dealing
Mobile app (iPhone, Android)
Tablet app (iPad)
L2 Dealer (DMA)
MetaTrader 4
ProRealTime
Direct market access No Yes, for shares
Getting started Introduction programme
Interactive platform preview
Demo account
Introduction programme
Interactive platform preview
Demo account

Example trades

FTSE 100 spread bet vs CFD trade

The example below takes a short position on the FTSE 100 – using the same deal size, it compares the process and outcome of a spread bet and a CFD trade if the market falls as predicted.

Spread bet

CFD trade

Spread bet CFD
Underlying market value FTSE 100 6200
Our price 6199.5-6200.5 6199.5-6200.5
Deal Sell at 6199.5 Sell at 6199.5
Deal size £10 per point One contract. Each contract is worth £10 per point
Margin required £3100 Deal size x mid price x margin rate (5%) £3100 Deal size x mid price x margin rate (currently 5%)
What happens next? The market falls to 6150 by 10pm – the price our funding is calculated at. It continues to fall steadily until the next day, reaching 6120
Funding Overnight funding charge of £3.38
(One-month Libor (eg 0.4925%) minus 2.5% x value of deal x underlying level at 10pm) / 365 (-2.0075% x £10 x 6150) / 365
Overnight funding charge of £3.38 (One-month Libor (eg 0.4925%) minus 2.5% x value of deal x underlying level at 10pm) / 365 (-2.0075% x £10 x 6150) / 365
Underlying market 6120
Close Buy at 6120.5 Buy at 6120.5
Overall market movement and profit/loss 6199.5 – 6120.5 = 79 Value of one point = £10
Gross profit = 79 x £10 = £790
6199.5 – 6120.5 = 79 Value of one point = £10
Gross profit = 79 x £10 = £790
Costs 1 pt spread: the underlying fell by 80 pts, but you benefited from a fall of 79. Funding deducted from cash balance: £3.38 1 pt spread: the underlying fell by 80 pts, but you benefited from a fall of 79. Funding deducted from cash balance: £3.38
Net profit £786.62 tax-free* £786.62 subject to tax
What if... If the underlying market rose to 6280 pts instead: 6280.5 – 6199.5 = 81 pts
81 x £10 + £3.44 (higher funding cost to account for higher market close at 10pm)
£813.44 net loss
If the underlying market rose to 6280 pts instead: 6280.5 – 6199.5 = 81 pts
81 x £10 + £3.44 (higher funding cost to account for higher market close at 10pm)
£813.44 net loss

The profit and net loss for placing this trade via spread bet or CFD is the same.

However, while spread bets are tax-free and you keep all your profit, CFDs can be subject to capital gains tax, depending on individual circumstance.

Because CFDs are subject to tax, you can offset losses you make via CFD as a tax deduction.

* Please note that tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

GBP/USD spread bet vs CFD trade

The example below demonstrates the differences between a spread bet and CFD trade on a long GBP/USD position, showing the outcome if the market rises as expected.

Spread bet

CFD trade

Spread bet DFB CFD
Market Spot GBP/USD
Price 15,579.7/15,580.5 1.55797/1.55805
Deal Buy $10 a point at 15,580.5 Buy 1 contract at 1.55805 (1 contract = £100,000)
Initial margin required Notional value is $155,805 (or £100,000) and margin factor is 3.33%, so margin = $5188.3 (or £3330)
What happens next? GBP/USD rallies overnight, and the position is held through 22:00 (London time)
Funding Funding = amount per point x funding adjustment factor= $10 x 0.27
= $2.70
Where funding adjustment includes underlying tom-next rate and IG's charge for holding positions overnight which is no more than 0.0022% per day.
Funding = amount per point x funding adjustment factor = $10 x 0.05
= $0.50
Where funding adjustment includes underlying tom-next rate and IG's charge for holding positions overnight which is no more than 0.0022% per day.
Price 15,695 - 15,695.8 1.5695 - 1.56958
Close You sell at 15,695 You sell at 1.5695
Gross profit $1145
15,695 – 15,580.5 = 114.5
Value per point = $10
114.5 x $10 = $1145
$1145
1.5695 – 1.55805 = 0.01145
Number of points = 0.01145 x 100000 = 114.5
114.5 x 10 = $1145
Costs 0.8 point IG spread (included)
Funding cost = $2.70
0.8 point IG spread (included)
Funding cost = $0.50
Net profit $1142.30 tax free* $1144.50 subject to tax
What if... If the market dropped 114.5 points instead:
$1145 + $2.70
Net loss = $1147.70
If the market dropped 114.5 points instead:
$1145 + $0.50
Net loss = $1145.50

Find more examples of spread betting and CFDs.

What are DFBs?

Daily funded bets (DFBs) are long-term bets on the cash price of an underlying instrument. DFBs have no expiry date, so we make a cash adjustment to your account to reflect funding charges.

Why do CFD and spread betting FX prices look different?

  • You trade forex via CFD in contracts or lots. We therefore display CFD forex prices in the same way you would expect to see them on an FX exchange: e.g. 1.31425
  • Because you spread bet on forex in currency per point, we display prices differently e.g. 13142.5. This makes it easier to see per point movements.

This makes no difference to the price you deal at or your potential profit or loss: it simply makes it easier to track per point movements.

* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

Open an account now

Open an account now

Fast execution on a huge range of markets

Enjoy flexible access to more than 17,000 global markets, with reliable execution

Deal seamlessly, wherever you are

Trade on the move with our natively designed, award-winning trading app

Feel secure with a trusted provider

With 45 years of experience, we’re proud to offer a truly market-leading service

Open an account now

Open an account now

Fast execution on a huge range of markets

Enjoy flexible access to more than 17,000 global markets, with reliable execution

Deal seamlessly, wherever you are

Trade on the move with our natively designed, award-winning trading app

Feel secure with a trusted provider

With 45 years of experience, we’re proud to offer a truly market-leading service

Start trading now

Log in to your account now to access today’s opportunity in a huge range of markets.

Start trading now

Log in to your account now to access today’s opportunity in a huge range of markets.

You might be interested in…

Browser-based desktop trading and native apps for all devices

We're clear about our charges, so you always know what fees you will incur

See how we've been changing the face of trading for more than 40 years

1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.