Treatment of Dividends

Another advantage of trading shares using a financial spread betting account is the treatment of dividends. These are paid out by listed companies twice a year to their shareholders out of their profits for that year. If you are spread betting, while you do not hold that company’s shares, you can still receive the economic benefit of the dividend. Most financial spread betting and CFD trading companies will credit your position in that company with 90% of the value of the dividend you would have received had you been holding the physical shares.

Some traders like using spread bets for this reason: they may have exhausted their capital gains tax allowances for the year already, taking dividends from shares they hold in their physical share trading account, where they hold actual stocks. Financial spread betting lets them get the benefit of dividends outside this, because spread betting is tax free in the UK. Bear in mind you are still only getting 90% of the dividend, not the full value, but at least it does not count towards your CGT allowance.