Help to Choose Account 'Type' with UK Broker

Beginner Questions
1

Hello,

My broker offers 4 account types during 1st time registration with them :confused::

  • Standard
  • CFD’s
  • Razor
  • Spread Betting

For a beginner retail trader to Forex, which one shall I choose for everyday forex trading that has the lowest spreads, no fees/commissions or has the cheapest fees/commissions and is exempt from the HMRC Tax?

Okay I see now for Razor has 0 spreads so there is a paid commission/extra fees to use this service and CFD’s are liable for Tax so that leaves me left with remaining 2 they are Spread Betting and Standard Accounts. What’s the difference between Spread Betting & Standard accounts at Pepperstone Broker? Which one to go for?

Cheers,

1 Like
2

I use Pepperstone Standard for everyday FX trading. which meets your requirement. I don’t know anything about their Spread Betting account. .

3

When I had questions about the different accounts my broker offers, I called them. Have you tried calling them and asking? They can’t give you suggestions, but they can give you information that will help you decide.

4

Spreadbetting in the UK is exempt from taxation. SB firms are subject to exactly identical regulation by the FCA as brokers offering share dealing/investment, conventional brokers and forex brokers offering CFD’s.

I’ve never heard of “Razor”.

5

No idea what razor is but to echo @tommor only spread betting is considered gambling in the UK and so therefore tax exempt. Partaking in any other form of trading will incur tax.

6

Is the standard account liable for taxes?

7

On that Basis why would anyone choose Standard account type over Spread Betting account type at Pepperstone or any other UK broker if Spread betting is exempt from tax?

8

You pay capital gains on CFDs but obviously these can be offset against losses. You’re absolutely right if it is offered and you can use it spreads offer a massive benefit with the lack of tax. The key difference that I can see between the two is the obvious tax difference and that spread bets expire where as CFDs don’t (excluding forwards).

Another clear benefit is if you are big enough and want to open a corporate account this is only possible via CFD accounts I think but this won’t apply to the majority of retail traders.

9

Spread-bets do not have to have an expiry.

Some traders don’t like the word “bet”, perhaps because their religion forbids gambling. This is a purely cosmetic objection.

Spread-bets don’t have the narrowest spreads available, but his is probably only going to make a difference to the bottom line if intensely scalping. But no new trader should be doing that anyway.

10

Okay so Standard account and CFD account are the same?

11

Do spread bets usually have expiry dates on them, does this mean open limit orders get expired that is don’t be on the orderbook forever?

12

No, spread bets do not usually have expiry dates. You can set an expiry date on a pending order but its not obligatory. The default situation on both is no expiry date.