Spread betting is a straightforward and tax-efficient way of leveraging the financial markets.
The spread-betting company predicts where a price or score of anything from a share to a commodity to a cricket game will stand at a specified time in the future. The prediction takes the form of a spread – the range between the low and high estimates. You then bet on those prices, 'buying' at the high price if you think the price will rise from current levels and 'selling' at the low price if you believe it will fall.
Spread-betting profits count as gambling wins, so they aren't liable for capital gains tax. However, spread-betting losses – which can be high – cannot be set against other gains to reduce tax.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Car tax rules are changing: what are the new vehicle excise duty rates?The rules around vehicle excise duty are changing this April. What are they, and how are they going to affect you?
-
Most affordable cities for single homebuyers revealedBuying a home by yourself? Analysis by Zoopla reveals the most affordable cities in the UK
