Spread Betting Guide to Tax-Efficient Trading with City Index

LONDON, April 4, 2012 /PRNewswire/ --

Spread betting offers traders a range of benefits from its low margin feature to tax-free profits*. With this in mind, we take a look at how many traders are now choosing to spread bet thousands of markets as an alternative to more conventional forms of trading.

Low Margin

As a margined product, spread betting with City Index only requires you to deposit a small percentage of the full value of the underlying instrument, typically between 1% and 10%, depending on the market.

Subsequently, the potential for both profits and losses, from an initial capital outlay, is significantly higher when compared to more conventional forms of trading.

Wide Range of Markets

Through City Index, traders can take advantage of prices on over 12,000 spread betting markets.

These include individual shares, indices and currencies globally, but traders can also place trades on sectors, commodities, bonds and interest rates.

One of the most widely traded markets in the world are indices such as the UK 100, which are especially popular among new traders.

City Index offer some of the tightest spreads available in the market, with as low as 1-point spreads on the UK 100, Wall Street, Germany 30 and France 40.

Market Volatility

Spread betting offers traders the ability to gain exposure to a market's movements regardless of its direction, which is why traders choosing this alternative form of trading have the potential to gain during times of market volatility.

With spread betting, you can potentially profit from a market that is both rising and falling; if you believe the markets are going to rise, you go long on the price. In turn, your profits will rise in line with any increase in that price. However, so will your losses with any fall in that price.

On the other hand, if you think the markets will fall, you can go short on the price. Your profits will rise in line with any fall on that price, and subsequently, your losses will increase with any rise in price.  

Tax-efficient* Trading

All profits gained through spread betting are presently exempt from Capital Gains Tax* in the UK.

Automatically, traders can benefit from saving a large portion of their profits which they would otherwise be required to pay if they were to trade the underlying markets.

As a derivatives product, it is also exempt from stamp duty* in the UK.

Remember, tax laws are subject to change and depend on individual circumstances. 

Summary

Spread betting with City Index offers traders a range of benefits including its low margin feature, exposure to a wide range of markets, the potential to profit at times of market volatility and tax-efficient* trading.

*Spread betting is exempt from UK stamp duty and Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.