UK spread betting and CFDs: what is different

People often ask whether a UK spread bet is a lighter version of a contract for difference. On the conduct rules, it is not. The FCA applies the retail leverage, close-out, negative-balance and risk-warning rules to both. The difference the definitions and the tax manuals actually draw is legal form, and then tax, and the tax manuals say the tax result is not automatic. This page is not tax advice and it does not say that either product is suitable.

The words are defined in the glossary: spread betting and contract for difference. Quoting units such as pips and lots are in how FX trading works. Whether the firm offering either product is authorised is a register check, covered in how to check whether a broker is regulated.

What the FCA calls each product

The FCA glossary entry for a contract for differences points at article 85 of the Regulated Activities Order. In summary, that covers rights under a contract for differences, or under another contract whose purpose is to secure a profit or avoid a loss by reference to fluctuations in property, an index, or another factor named in the contract. A CFD does not transfer the share, currency or commodity it refers to.

The glossary entry for a spread bet calls it a contract for differences that is a gaming contract: the older idea of a game of chance for winnings of money or money’s worth. The FCA’s firm page on contracts for difference treats spread bets and rolling spot FX as part of the CFD product area it supervises. So “CFD” on that page is the product area. “Spread bet” remains its own glossary term inside that area.

Both, where they are leveraged financial instruments, sit in the glossary category restricted speculative investments, together with leveraged rolling spot forex contracts (other than one limb of the rolling-spot definition) and restricted options. COBS 22.5 uses that group. The name is a handbook category. Firms do not sell a product called a restricted speculative investment.

The retail conduct rules cover both

COBS 22.5, as it stood on 10 November 2026, limits how these products are marketed and sold to a retail client. The same section covers leveraged CFDs, spread bets and rolling spot FX. Choosing a spread bet does not step outside it.

Four consequences are the ones readers usually meet:

• Initial margin has a floor by underlying. For a major FX pair that floor is at least 3.33% of exposure, which the FCA describes as the 30:1 end of a retail cap that runs down to 2:1. The bands are set out in how FX trading works and on the leverage page. They are limits, not a suggested setting.
• Margin close-out: the firm must not let net equity stay below half of the margin required to maintain the open positions. If it does, the firm must close as soon as market conditions allow. A margin call does not replace that duty.
• Negative balance protection: a retail client’s liability for the restricted speculative investments connected to the account is limited to the funds in that account. The funds can still be lost.
• A risk warning, including the firm’s own loss percentage, has to be shown when the products are marketed to retail clients. The percentage is the firm’s figure, calculated as the rule requires. This site does not publish one.

A client opted up to an elective professional client loses these retail protections. The FCA’s 2019 policy statement said supervisors would look at firms that opted clients up in order to avoid the rules. The tests are on the professional-client glossary page. This guide does not suggest opting up.

Loss on either product can exceed the margin that was posted, except where negative balance protection applies. Neither product gives ownership of the underlying.

Tax is a separate manual, and it is not advice

The conduct rules are the FCA’s. Tax is HMRC’s, and HMRC’s manuals are not a ruling on any one person. Nothing here says whether a particular bet or contract is taxable. If that question matters, it is a question for HMRC or a tax adviser, using the actual contract.

What the manuals say, read for this guide on 10 November 2026:

• BIM22015 is the introduction to betting and gambling in the business-income manual. BIM22020 says a person who places a spread bet is not normally carrying on a trade, so the profit is not taxed as trading income and the loss is not relieved. It also says that is not absolute. Tax can arise when the win comes from carrying on a trade, judged from the contract and the economic substance.
• BIM56900 is the companies’ side. HMRC treats financial spread bets held by companies inside the derivative-contract rules. A company is not in the same place as an individual under that page.
• CG56105 says no chargeable gain arises on financial spread betting because no asset is acquired or disposed of. The manual illustrates a spread with a quoted buy price, a lower sell price, and a stake per point. That stake is the manual’s teaching example. It is not a size to use.

A CFD is not given the same treatment by those pages. BIM56900 is titled for contracts for differences and spread betting together on the company side. This guide does not extend the spread-bet sentences to CFDs, and it does not extend the company sentences to individuals.

What the directory records

UK spread betting in the broker directory is a yes, a no, or an unknown. Unknown means the firm’s product pages, when they were checked, did not say either way. The filter for that field is on the broker list. IG is one firm whose own UK pages, as recorded in the directory, offer both spread betting and CFDs, through the two FCA entities named on that entry. That is a description of what those pages say. It is not a preference for the firm or for either product.

To see how a firm’s own ticket labels a spread bet and a CFD, use a demo account. The stake or the size on that ticket is still the firm’s interface. It is not the HMRC illustration, and it is not a recommendation.

This guide is for education and reference only. It is not financial, investment, tax, or trading advice, and it does not recommend a firm, product, or strategy. It does not provide signals, rankings, or profit claims. Contracts for difference, spread bets, and other leveraged products can lose money quickly. Worked figures are illustrations from the cited sources, or arithmetic on those figures. Where a guide asks you to look at a platform, use a demo account.