How do spread betting and CFD trading work?
Both let you profit or lose from a price move without owning the asset, and both use leverage. The difference is the wrapper. With a spread bet, you choose a stake per point. If you stake £2 per point on the UK100 and it rises 40 points, you make £80, before costs. If it falls 40 points, you lose £80. With a CFD, you buy or sell a number of contracts, and your gain or loss is the price change multiplied by your position size.
Sized to the same exposure, the market result is the same. What changes is the way you set the size, the costs on some products, and the possible tax treatment. If you want to try both side by side, you can open a Pepperstone account and compare them on the demo first.
Spread betting vs CFD trading for a UK client
| Feature | Spread bet | CFD |
|---|---|---|
| How you size it | Stake per point, for example £2 | Number of contracts or lots |
| Result shown in | Pounds per point moved | Price change × position size |
| UK tax (general) | Described as tax-free; depends on your circumstances | Treated differently; check with HMRC or an adviser |
| Leverage for retail | Capped by FCA rules | Capped by FCA rules |
| Crypto for UK retail | Not allowed | Not allowed |
Is spread betting tax free in the UK?
Spread betting is generally described as tax-free for UK clients, and Pepperstone uses that description. But tax treatment depends on your individual circumstances and can change. We cannot tell you how it applies to you.
CFD gains are treated differently for tax purposes. If tax is the reason you are choosing one over the other, read HMRC's guidance or speak to a qualified tax adviser first. Never let a possible tax saving push you into a larger position than you would otherwise take.
Is spread betting or CFD trading better for a UK trader?
For most UK retail traders who think in pounds, spread betting is simpler to size. Its general tax description may also appeal, though that depends on each person's circumstances. CFDs are often the better fit if you use automated strategies built around lots, or if your plan is written in contract sizes. Neither is safer: both are leveraged, and Pepperstone publishes one loss rate for both.
Which wrapper fits which UK trader
| Your situation | Usually better fit | Reason |
|---|---|---|
| You size trades as "£ per point" | Spread bet | Matches how you think about risk |
| You run an Expert Advisor sized in lots | CFD | Automation tools expect contract sizes |
| You want the general UK tax treatment of spread bets | Spread bet | Subject to your own circumstances |
| You trade US shares by share count | CFD | Pepperstone charges 0.02 USD per share per side on US share CFDs |
Does Pepperstone offer spread betting in the UK?
Yes. Pepperstone Limited, authorised by the FCA under Firm Reference Number 684312, offers spread betting to UK clients. Pepperstone advertises spreads from 0.1 points with zero commission to pay. It also offers no commission on index spread bets, although overnight funding may apply if you hold a position past the daily cut-off.
As with any UK broker, crypto is off the table: the FCA bans crypto spread bets and CFDs for retail clients.