Quick comparison
- Spread betting: leveraged, can go short, no stamp duty, gains generally CGT-free, financing costs, no ownership.
- Buying shares: unleveraged, you own the shares, stamp duty on UK shares, ISA-eligible, suited to long-term investing.
Side by side
| Spread betting | Buying shares | |
|---|---|---|
| Ownership | No | Yes (voting rights, etc.) |
| Leverage | Up to 5:1 on shares for retail | None (unless margin account) |
| Go short | Yes | Not easily |
| Stamp duty | None | 0.5% on most UK share purchases |
| Tax on gains | Generally exempt | CGT (unless in an ISA/SIPP) |
| Holding cost | Overnight financing | Platform fee |
| Max loss | Your account balance (negative balance protection) | Your investment |
Which suits what?
- Short-term trading or shorting: spread betting can be more efficient.
- Long-term investing: buying shares (ideally in an ISA) avoids financing costs that build up over months.
The hidden cost of holding spread bets
A £10,000 share spread bet with 6.5% annual financing costs about £650 a year — usually far more than the stamp duty and platform fees of owning the shares. That's why spread betting suits shorter holding periods.
Frequently asked questions
Do I get dividends when spread betting on shares?
You don't receive dividends as a shareholder, but long positions are usually credited with a dividend adjustment and short positions debited.
Can I hold share spread bets in an ISA?
No. Spread bets aren't ISA-eligible. Buying shares in a stocks and shares ISA shelters gains and dividends from tax.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.