Tax-Efficient CFDs Help Traders Boost Profits

March 14, 2011 - PRLog -- The tax benefits of trading CFDs as opposed to the majority of cash equity trades are helping traders cut down the costs of transaction, saving on Stamp Duty which would normally be applicable while trading highly-leveraged positions in a range of different markets.

Compared with trading shares, which attracts both capital gains tax and stamp duty in the UK, traders can benefit from a lower tax treatment of CFDs by HM Revenue & Custom to save money and over time benefit aggregate trading profits.

Coupled with the highly-leveraged nature of CFD ( http://www.independentinvestor.co.uk/cfd/ ) transacting, afforded by the low margin requirements of most  CFD brokers ( http://www.independentinvestor.co.uk/cfd/compare-cfd-brokers.php ), this presents a direct financial incentive for traders to switch to CFDs from cash trading, in order to both maximise returns and minimise the costs of profitable trading.

A spokesperson for IndependentInvestor.co.uk, which monitors the CFD industry and the financial markets at large, has suggested that the beneficial tax regime governing CFDs, in conjunction with the potential for large profits, acts as a strong incentive towards the trend of CFDs.

"CFDs proved to be an incredibly popular instrument of choice in 2010, capturing the imaginations of traders across the spectrum of experience levels to rival cash trades in the equity markets for the first time.  As the trickle-down effect of City endorsement began to filter down to private traders, and with a growing awareness of the tax advantages of trading CFDs, the popularity of CFDs as an instrument has never been stronger."

"At IndependentInvestor.co.uk, we believe the tax and leverage double-act have served to bolster support for CFDs, and will continue to act as a massive incentive for traders looking to explore new avenues of return on their capital. With market-beating leverage built-in to the DNA of CFD transactions, and the added layer of a benefit in the form of a tax saving, it's no wonder that so many traders are making the switch to CFDs, and we're committed to standing to support this paradigm shift with the right tools and resources for successful CFD trading."

IndependentInvestor.co.uk provides free trading information for CFD traders of all experience levels, in addition to similar in-depth coverage of spread betting and share dealing.  With independent comparisons of the leading brokers across each discipline, IndependentInvestor.co.uk helps countless traders get off the mark with CFDs every year.