What are the benefits of spread betting?
• Spread betting has in no capital gains tax, which is beneficial if you are close to your annual allowance (currently £10260)
• The spread betting companies offer free, exceptional charting packages which are not available on most share dealing accounts
• Spread betting allows you to free up spare cash by betting using leverage taking advantage of incredibly low interest rates.
• Spread betting allows you to short stocks which is not available through most share dealing accounts (you need £70,000 and above to be able to short a stock on a traditional the share dealing account
• Dividends received through spread betting accounts are not taxable as income which can save you up to 30 per cent of for a higher rate taxpayer. You receive a dividend as normal.
• There is a huge range of markets from exotic stocks to UK FTSE stocks and currencies.
• In most instances the commission will actually be less than if you went through a traditional broker.
• Your money is guaranteed under the FSA compensation scheme effectively as if it were in a bank account
What are the disadvantages of spread betting?
• Spread betting companies charge you interest on the money that you borrow.
• The money on deposit is not generally given interest.
• In some instances particularly for AIM shares spread betting is much more expensive than traditional means this is due to high commission and high margin rates.