Spread Betting vs Shares Dealing
Spread betting provides an alternative to traditional shares trading because, while there are similarities between the two, spread betting has exciting additional features.
- Tax-free profits* - No Capital Gains Tax to pay on your profits and spread betting is also free from Stamp Duty
- No commission fees to pay – spread betting is free from commission
- Leveraged trading – speculate on share prices with just a fraction of the total trade value
- Instant access to over 12,000 markets at any time – access UK, EU, US, Asian shares and many more asset classes
Take advantage of falling share prices
In traditional shares dealing, you physically buy a certain number of a company’s shares in the hope that these shares will rise in value and you can sell them back later at a higher price. You can only profit if the share price increases.
However, in spread betting, you can speculate on any price movement of a company’s shares price - up or down. In stark contrast to traditional shares dealing, this means you can also place a spread bet trade on a falling share price - called ‘going short’ - something that isn’t possible in traditional shares dealing.
Leverage
A spread bet is a leveraged product, which means you only need to deposit a small percentage of the full value of your position - known as margin. This deposit amount or ‘margin requirement’ varies between markets; for example, the initial deposit amount needed to place a spread bet on Vodafone is just 4%.
It’s crucial to remember that although your full trade exposure is much larger than your initial outlay, and therefore offers the potential for much larger gains, it also means that if the markets don’t move in the way you expect the losses you incur can exceed your initial deposit amount.
Learn more about how to manage your risk.
Tax-free profits*
With regular shares dealing, you have to pay tax on any profits you make. But, in the UK, spread betting is currently exempt from Capital Gains Tax and Stamp Duty.*
We’ve summarised these key differences between spread betting and shares dealing in the table below so you can discover which form of trading is most suitable for you.
| Feature | Spread betting | Shares dealing |
|---|---|---|
| Free from Capital Gains Tax* - no CGT to pay on your trading profits | Yes | |
| Free from Stamp Duty* | Yes | |
| No commission - spread bets are free from commission | Yes | |
| Ability to go long - buy and take advantage of rising prices | Yes | Yes |
| Ability to go short - sell and take advantage of falling prices | Yes | |
| Ability to hedge - go short and mitigate against potential losses in your shares portfolio | Yes | |
| Leveraged trading - gain a large exposure for a fraction of the value | Yes | |
| Immediate dealing - instant trading both in and out of a market | Yes | Yes |
| Access to other asset classes - such as indices, FX, etc | Yes | |
| Access to global shares - trade over 9,000 different shares from around the world | Yes | Yes |
| Receive dividend and interest adjustments | Yes | Yes |
| Physical ownership - benefits include the ability to attend AGMs | Yes |
