CFD v Spreadbet

This is a discussion on CFD v Spreadbet within the First Steps forums, part of the Reception category; Hello all, I was wondering is someone could explain to me why you would trade CFD's rather than spreadbet. I ...

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Old May 14, 2018, 6:23pm   #1
Joined May 2018
CFD v Spreadbet

Hello all,

I was wondering is someone could explain to me why you would trade CFD's rather than spreadbet. I would like to understand the advantages CFD's have over spreadbetting considering spreadbetting is tax free?

Best
Gtop
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Old May 15, 2018, 7:32am   #3
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Whichever you choose, make sure its a UK-based, FCA-regulated firm. Do not send money to a firm based at an accommodation address on some far-away small scruffy island or in a former Soviet steel factory town. The firm you use should be a member of the Financial Services Compensation Scheme and should keep clients' funds in a separate bank account to their own operating capital.
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Old May 15, 2018, 8:34am   #4
Joined Jul 2004
Quote:
Originally Posted by gtopmafia View Post
Hello all,

I was wondering is someone could explain to me why you would trade CFD's rather than spreadbet. I would like to understand the advantages CFD's have over spreadbetting considering spreadbetting is tax free?

Best
Gtop
assuming you are new at this? (and pay tax in uk)

trading CFDs you can use the losses to pay less tax on other income?

so if you open two accounts one CFD and one SB then you could use the CFD as your first account where you place trades manually or auto

then at the same time open a opposite trade o the SB account

say you buy CFD eurusd at x and place a stop at y

then sell SB eurusd at x and take profit at y

this should work

it could be a problem to do this manually? maybe there is some EA or something that can copy the trade and reverse automatically?

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Old May 15, 2018, 8:40am   #5
Joined May 2018
gtopmafia started this thread Ok Thank you for the replies I will look into this!
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Old May 15, 2018, 9:02am   #6
Joined Feb 2002
Sounds like a world of complications and difficult dealings with the tax man, when SB keeps you off their radar.
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Old May 15, 2018, 10:33am   #7
 
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Quote:
Originally Posted by kalott View Post
assuming you are new at this? (and pay tax in uk)

trading CFDs you can use the losses to pay less tax on other income?

so if you open two accounts one CFD and one SB then you could use the CFD as your first account where you place trades manually or auto

then at the same time open a opposite trade o the SB account

say you buy CFD eurusd at x and place a stop at y

then sell SB eurusd at x and take profit at y

this should work

it could be a problem to do this manually? maybe there is some EA or something that can copy the trade and reverse automatically?

Be careful with this one Kalott.

HMRC (UK tax office) would more than likely pair up the two as you would be deemed to clearly be using spread betting to hedge against a trading account. Therefore it would fall into 'carrying on as a business' in their eyes.

Caveat: I'm not 100% on this but pretty dam sure. Therefore by doing so would mean that your profits/losses on spread betting could be offset against your other trading activities. Unless anyone can shed any further light/proof on this subject to the contrary, I would go with the fact it would be taxed.

CFD's are great if you need an income. Lets face it, many people do, mortgages, loans, credit cards etc. Due to my gambling habits my credit rating is based solely on cash.
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Old May 15, 2018, 6:29pm   #8
Joined Oct 2015
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Originally Posted by kalott View Post
assuming you are new at this? (and pay tax in uk)

trading CFDs you can use the losses to pay less tax on other income?

so if you open two accounts one CFD and one SB then you could use the CFD as your first account where you place trades manually or auto

then at the same time open a opposite trade o the SB account

say you buy CFD eurusd at x and place a stop at y

then sell SB eurusd at x and take profit at y

this should work

it could be a problem to do this manually? maybe there is some EA or something that can copy the trade and reverse automatically?

You don't offset CFD losses against taxable income you offset them against capital gains. Its CGT which can potentially be reduced. There will be no CGT liability to offset because the other account is spreadbetting. There would also be no way of making money because you are perfectly hedged at all times
good fun though

Last edited by Kaeso; May 15, 2018 at 11:14pm.
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