Forex Trading Tax in the UK: CGT, Spread Betting and HMRC (2026/27)

How your forex profits are taxed in the UK depends on the product you use, not on the currency pair you trade. Spread bet winnings are normally free of both Capital Gains Tax and Income Tax, because HMRC treats a spread bet as a bet. Profits on CFDs and rolling spot FX with a broker fall under Capital Gains Tax (CGT) instead: for 2026/27 you get a £3,000 annual exempt amount, then pay 18% on gains that fit inside your basic rate band and 24% on the rest. A small minority of people whose dealing looks like a genuine business pay Income Tax and National Insurance instead, but HMRC starts from the presumption that an individual's dealing is not a trade.

Those four boxes (spread bets, CFDs, spot currency and trading as a business) cover almost every retail forex trader in the country. Below we set out each one with the HMRC manual reference behind it, flag the out-of-date rates still quoted in places, and work through real £ examples and the self assessment dates you need.

The four ways HMRC can see your forex profits

Start with the product, because that decides almost everything. A financial spread bet is a wager on price movement priced in pounds per point. HMRC's Capital Gains Manual at CG56105 is blunt about it: no assets are acquired or disposed of and "no chargeable gains or allowable losses arise from spread betting". The Business Income Manual at BIM56900 adds that profits and losses from gambling contracts are outside the scope of Income Tax for individuals. So for most people a spread bet win is simply not taxed.

A contract for difference is treated very differently. According to CG56100, "retail contracts for differences are financial futures, and, unless the profits are taxable as trading income, in almost every case TCGA92/S143 charges the outcomes under the capital gains regime." Rolling spot FX offered by a CFD broker works in the same way in practice, since the position is a derivative you close out rather than currency you take delivery of. Every closed CFD is a disposal, and the net result goes into your CGT calculation.

Actual foreign currency that you buy and hold is a third, smaller category. Currency other than sterling is itself a chargeable asset (CG78300), so converting pounds into dollars, holding them and converting back at a better rate can produce a gain. Cash held for personal spending abroad is exempt, which is why a holiday currency profit never troubles anyone. The fourth category is trading as a business, which we cover further down: it applies when HMRC accepts that your dealing is organised like a trade, and it switches you from CGT to Income Tax.

Two rows need a word of their own. Payouts from a funded-trader programme are not trading profits of your own at all, and we explain the self-employment treatment in how prop firm payouts are taxed. And no row in the table can be moved into an ISA: CFDs, spread bets and foreign currency cash are not qualifying investments, as our forex and ISA explainer sets out.

CGT on CFDs: the numbers for 2026/27

For 2026/27 (6 April 2026 to 5 April 2027) the annual exempt amount is £3,000. It was £12,300 as recently as 2022/23 and £6,000 in 2023/24, which is why many part-time CFD traders who never paid CGT before now find they owe something. Only net gains above £3,000 are taxed.

The rate depends on how much of your basic rate band is left after your taxable income. Gains that fit inside the band pay 18%, and anything above it pays 24%. The band is £37,700 of taxable income, so for someone with the standard £12,570 personal allowance it runs out once total income reaches £50,270. Your CFD gains sit on top of your salary, so a basic rate taxpayer with a good year can end up paying partly at 18% and partly at 24%.

Unlike Income Tax, CGT is not collected through payments on account. You pay it in one go by 31 January after the end of the tax year in which you closed the trades. That makes it easy to spend money that you owe HMRC, so many traders move a slice of each profitable month into a separate savings account.

Worked examples in pounds

Take three traders who all closed CFD positions in 2026/27 and had no other capital gains. We ignore Scottish income tax bands and any unusual reliefs to keep the arithmetic clear.

1. Priya, salary £28,000, net CFD gains £2,600. The gain is below £3,000, so no CGT is due. If her total disposal proceeds stayed under £50,000 and she is not otherwise in self assessment, she may not need to report it at all.
2. Tom, salary £35,000, net CFD gains £20,000. Taxable gain after the allowance is £17,000. His taxable income is £22,430, leaving £15,270 of basic rate band. So £15,270 is taxed at 18% (£2,748.60) and £1,730 at 24% (£415.20), a bill of £3,163.80.
3. Hannah, salary £62,000, net CFD gains £10,000. Her salary already fills the basic rate band, so the taxable £7,000 is all charged at 24%: £1,680.

Had all three placed the same trades as spread bets, none would owe anything. That gap is the reason most UK retail traders who use FCA-authorised brokers pick spread betting. The trade-off comes in loss years, which we cover next, and in our spread betting vs CFD comparison.

Losses, costs and the currency of your account

CFD losses are allowable capital losses. They are set against gains in the same tax year first, and any unused balance can be carried forward indefinitely, provided you claim it within four years of the end of the tax year in which the loss arose. A trader with £6,000 of CFD losses in 2025/26 has until 5 April 2030 to put in the claim. Spread bet losses give you nothing, because the same rule that keeps winnings out of tax keeps losses out too.

CG56100 says all debits and credits to a CFD account, including commission and payments equivalent to interest and dividends, go into the computation. In plain terms, commission reduces your gain, overnight financing charges reduce it, and financing credits or dividend adjustments increase it. Deposits and withdrawals are not taxable events. Tax follows closed trades, whether or not the money ever leaves the broker.

If your account is in US dollars, each disposal has to be valued in sterling at the date it happens, following the approach in CG78310. A single average rate for the whole year is simpler but can give a different answer, especially in a year when cable moved several cents. Our self assessment walk-through explains how to build that record without spending a weekend on it.

When forex trading becomes a business

HMRC's starting point for individuals is set out in BIM56850: there is a "prima facie presumption" that speculative dealing in financial instruments is not a trade. The courts have repeatedly agreed, and most people who describe themselves as full-time traders are still, for tax purposes, speculators paying CGT on CFDs. BIM56860 discusses three cases and the factors that can take a case "out of the norm", such as professional expertise, volume, a trader-like organisation and time spent, while stressing that no single factor decides it.

Trading status is not automatically good or bad. Profits would face Income Tax at 20%, 40% or 45% plus Class 4 National Insurance, which is higher than CGT for most people. Losses, though, could be set against other income, subject to limits. Our explainer on HMRC's badges of trade for forex goes through the tests. Spread betting sits in a separate category again: BIM22017 records the old case of Graham v Green, where the court held that "there is no tax on a habit", even for a systematic, skilled bettor.

Self assessment dates and what to report

CFD gains go on the SA108 Capital Gains Tax summary pages of your tax return. Fill those pages in if your gains before losses were above £3,000, if the total value of what you disposed of was over £50,000, or if you want to claim a loss. Spread bets are not reported at all for a normal individual.

If you have never filed before, register for self assessment early: the Unique Taxpayer Reference arrives by post and can take a couple of weeks. A late online return starts with a £100 penalty even if no tax is owed, and interest runs on unpaid tax from 1 February. The full process is in our guide to reporting CFD gains on self assessment.

Records to keep

HMRC can ask you to back up any figure on your return, and a CFD computation with hundreds of trades is hard to rebuild from memory. The simplest habit is a monthly export of your full trade history as a spreadsheet, saved somewhere other than the broker’s own portal. Accounts get closed, brands change and old statements are not always easy to retrieve years later.

• Trade history: every closed position with open and close dates, prices, size, commission and financing.
• Exchange rates: the sterling rate used for each disposal in a non-sterling account, and the source you took it from.
• Your computation: the spreadsheet or summary behind the SA108 figures, plus any tax summary the broker issued.
• Loss claims: the return or letter on which you claimed each loss, kept for as long as the loss is being carried forward.
• Spread bet statements: not taxable, but useful to explain large deposits into your bank account if anyone asks.

For individuals who file on time and are not self-employed, gov.uk says to keep records for at least 22 months after the end of the tax year the return covers. Hold on to them for longer while you carry losses forward. Our self assessment walk-through covers retention periods and the SA108 boxes in more detail.

Budget risk and what we would do now

The next Budget is on 28 October 2026. Press reports in August 2026 speculated that the Chancellor could move CGT rates closer to Income Tax rates. That is speculation, not policy, and we would not change a trading plan around a rumour. Two points are worth keeping in mind anyway. The October 2024 rate rise took effect on Budget day itself, so any change could apply to trades closed from 28 October onwards rather than from the next April. Spread betting's tax status rests on gambling law and HMRC's long-standing manuals rather than a relief that can be switched off quickly, though no rule is permanent.

Our view at FX Recap: if you trade forex profitably and do not need to offset losses against other gains, an FCA-authorised spread betting account is the tax-efficient default. If you use an offshore broker that only offers CFDs, you are in the CGT regime and give up the Financial Ombudsman and FSCS as well. Check any firm on the FCA Register before you open an account.

Frequently asked

Related reading

• Is spread betting tax free?
• Spread betting vs CFDs
• Report CFD gains on self assessment
• HMRC badges of trade for forex
• IC Markets and UK tax
• Prop firm payouts and tax