HMRC internal manual

Capital Gains Manual

CG56105 - Futures: financial futures: financial spread betting

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Instead of buying and selling financial futures or options an individual may simply gamble on the future direction of prices or indices. There are a number of spread-betting companies in the UK with which such bets may be placed.

For example, you might choose to bet on movement in the FTSE 100. If the index stands currently at 5400, the company might offer a ‘buy’ price of 5401 and a ‘sell’ price of 5399; the difference is the company’s ‘spread’. Buying with a stake of £5 per point you win £5 for every point the then selling price exceeds 5401 when you close your bet, but lose £5 per point if the index instead has fallen. Similarly, if you bet on the market falling, you win if on closing your bet the then buying price is below 5399, but lose if the market has risen.

The spread-betting company normally requires only a small deposit. Winnings or losses may well exceed this sum.

Though the terminology used in spread betting frequently echoes that of the derivatives market, no assets are acquired or disposed of and no chargeable gains or allowable losses arise from spread betting, see CG12602.