Key points for 2026/27
- CFD profits: normally Capital Gains Tax (CGT).
- Annual exempt amount: £3,000 of gains tax-free each tax year.
- CGT rates: 18% (basic-rate band) and 24% (above it).
- Spread betting: profits generally free of CGT and stamp duty — but losses can't be offset.
- Self Assessment deadline: 31 January after the tax year ends (tax year runs 6 April – 5 April).
How HMRC decides which tax applies
For most private individuals, trading forex through a broker is treated as investing, not as a business. That means gains fall under Capital Gains Tax. The product you use matters, though:
| Product | Usual tax treatment | Losses |
|---|---|---|
| Spread betting | Generally exempt from CGT and stamp duty | Cannot be offset |
| CFDs | Capital Gains Tax; no stamp duty | Can be offset against gains and carried forward |
| Trading as a business | Income Tax and National Insurance on profits | Trading loss rules apply |
Capital Gains Tax on CFD profits
Each tax year you can make £3,000 of net capital gains (from all sources, not just trading) without paying CGT. Above that, gains are taxed at:
- 18% on gains that fall within your unused basic-rate income tax band;
- 24% on gains above it (higher and additional-rate taxpayers pay 24% on all taxable gains).
Worked example
Sam earns a salary of £40,000 and makes £8,000 net profit trading CFDs in the 2026/27 tax year.
- Net gain: £8,000
- Minus annual exempt amount: £8,000 − £3,000 = £5,000 taxable
- Assuming the standard £12,570 Personal Allowance, Sam's taxable income is £27,430, leaving £10,270 of the £37,700 basic-rate band unused.
- The whole £5,000 fits inside that unused band, so it's taxed at 18%: £900 CGT. If Sam were a higher-rate taxpayer, it would be £5,000 × 24% = £1,200.
Using losses
Losses on CFD trades are set against gains in the same tax year first. Any unused losses can be carried forward to future years — but only if you report them to HMRC, normally within four years of the end of the tax year in which they arose. Keep your annual statements from your broker.
Spread betting and tax
Spread betting is treated as betting for tax purposes, so for most UK residents profits are free of CGT and stamp duty, and don't need to be reported. The trade-off is that losses can't be used to reduce tax on other gains.
When trading becomes income
HMRC looks at the "badges of trade" — how often you trade, how organised and systematic you are, whether you rely on it for a living, and whether you do it on borrowed money or for others. If you're treated as trading, profits are subject to Income Tax and National Insurance rather than CGT. For most people with a job who trade on the side, CGT applies.
How to report forex gains
- Download annual profit-and-loss statements from your broker.
- Work out your net gain or loss for the tax year (6 April to 5 April).
- Report it on your Self Assessment return (capital gains pages) if your taxable gains exceed the annual exempt amount, if your total disposal proceeds exceed £50,000, or if you want to register losses.
- File and pay by 31 January following the end of the tax year.
Other tax points
- ISAs and SIPPs: CFDs and spread bets aren't eligible.
- Stamp duty: not charged on CFDs or spread bets, unlike buying UK shares directly.
- Currency of calculation: gains must be reported in pounds sterling.
- Non-UK residents: different rules apply — check the tax rules where you live.
Common mistakes UK traders make with tax
- Not registering losses: unreported CFD losses can't be carried forward. Report them within four years.
- Forgetting the £50,000 proceeds rule: active traders can exceed it quickly even with small net gains.
- Mixing up products: spread betting and CFD results are treated differently — keep them separate.
- Using account balance changes as "profit": deposits and withdrawals aren't gains or losses; use the broker's realised P&L statement.
- Ignoring financing and fees: overnight financing and commission are part of the cost of your trades.
Tax year dates to remember
| Date | What happens |
|---|---|
| 6 April | New tax year starts; your £3,000 annual exempt amount resets |
| 5 April | Tax year ends |
| 5 October | Deadline to register for Self Assessment if you haven't filed before |
| 31 January | Online Self Assessment filing and payment deadline |
Spread betting vs CFDs: a tax comparison
| Scenario | Spread betting | CFDs |
|---|---|---|
| £10,000 profit in the year (higher-rate taxpayer) | Generally £0 | (£10,000 − £3,000) × 24% = £1,680 |
| £5,000 loss in the year | No relief | Can offset other gains and carry forward |
Frequently asked questions
Do you pay tax on forex trading in the UK?
Usually yes if you trade CFDs or similar products: profits are normally subject to Capital Gains Tax above the £3,000 annual exempt amount. Spread betting profits are generally exempt from CGT for UK residents.
What is the CGT rate on forex CFD profits?
Since 30 October 2024, gains are taxed at 18% where they fall within your basic-rate band and 24% above it.
Can I offset forex trading losses?
Losses on CFDs can be offset against other capital gains in the same year and carried forward to future years if you report them to HMRC (normally within four years). Spread betting losses can't be offset.
Is spread betting really tax-free?
For most UK residents, spread betting profits are not subject to Capital Gains Tax or stamp duty. HMRC could treat it differently if spread betting is your sole source of income and run like a business, but that's rare.
Can I trade forex in an ISA?
No. CFDs and spread bets are not ISA-eligible investments.
What are the tax implications of forex trading in the UK?
CFD gains are usually subject to Capital Gains Tax above the £3,000 allowance, spread betting gains are generally tax-free, and full-time professional trading may be taxed as income.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money. Content is general information, not financial or tax advice. This guide is general information based on HMRC rules at the time of writing. Tax treatment depends on your individual circumstances and can change. Consider professional advice.