What are the Benefits of Spread Betting?

There are several benefits with Spread Betting over traditional share trading - and these are a few of them.

1. You do not pay Capital Gains Tax (CGT) in the UK on spread betting profits. Currently, if you make money in a normal share trading account, you will be subject to tax on the profits. With spread betting, this is not the case; although there is a grey area around this if spread betting is your sole source of income.

2. No Stamp Duty. As you don't actually own the shares or instruments you are trading, you do not have to pay stamp duty on purchases either.

3. You can trade with a fraction of the trade value - ie, you don't actually have to hold all the money to trade it. This is called trading on margin, or leverage. The big advantage is that you can see much bigger gains quickly, without having to put down the full amount of money -  for instance, you might be able to trade £5,000 worth of Barclays shares, with a deposit of only £250.

4. You can make money in a falling market. With traditional share trading, you can only make money when a share price goes up, or pays out a dividend. With spread betting, you can bet on a share or instrument moving either way - so you can make money when it falls - this is called going 'short', or 'shorting'.