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Yahoo! Finance UK & Ireland - Tax glossary
Category: Economy and Finance > Tax
Date & country: 17/01/2008, UK
Words: 491

Share schemes
Schemes where you can obtain shares in the company you are employed by, normally on preferential terms. Certain schemes, if approved by the Inland Revenue, enjoy certain tax advantages for you the employee.

The ownership of a company is divided between its members who will each own a number of shares in that company. There can be different types of members (shareholders) with different rights represented by different classes of shares.

Shares acquired
Shares acquired by reason of your employment may be taxable. The amount taxable is based on the increase in the value of your shares in the period after you acquired them, where the shares had either restrictions on them, or they were in a subsidiary company. Special benefits you receive by owning the shares may also be taxable.

Shares as benefits
If you do not pay the full price for shares you receive from your employment you are normally taxed on the undervalue (the difference between the value of the shares and the amount you pay). If you have not been taxed, then you are treated as if you had been made an interest free loan of this amount. You will be taxed on the interest benefit.

Simpler basis
The simpler basis of calculating your motoring costs allows you to use mileage rates published by the Inland Revenue called the Fixed Profit Car Scheme rates. The rate varies according to the cylinder capacity of your car and a higher rate is used for the first 4,000 business miles.

single parent's allowance
This is an additional allowance that you can claim if you are single, separated, divorced or widowed and have a child living with you. The child must be under 16 or in full time education or training. You can only claim one allowance and the amount you claim may be restricted if you marry or separate during the tax year. Exceptionally, you may be a …

Social security
The Department of Social Security (DSS) oversees the Benefits Agency (which deals with the payment of state benefits), and until 6 April 1999, was responsible for overseeing the Contributions Agency that dealt with the collection and recording of national insurance contributions. (Back to top)

Social security benefit
A benefit received from the Department of Social Security (DSS). There are many types of benefits that are available. Benefits may be based on national insurance contributions that you have paid, or on your needs if you are elderly, disabled or on a low income. If you think you may beentitled to any, ask the Benefits Agency of the DSS.

Social security payments
Payments made to you by the Department of Social Security. These payments may be based on national insurance contributions that you have paid or on your needs if you are elderly, disabled or on a low income.

Special commissioners
The Special Commissioners sit as a tribunal to hear disputes between the Inland Revenue and taxpayers. They are professionally qualified and normally hear disputes of a technical nature. Other disputes are heard by the General Commissioners.

Specific legacies
A legacy (a gift left in a will) such as a sum of cash or property. Does not include gifts of residue (the remaining assets of the estate after paying inheritance tax, administration expenses and specific legacies).

Split View
Split View divides the working areain half horizontally. This view enables you to see the Inland Revenue Form you are currently working on in the lower frame as you answer interview questions in the top frame. An adjustable bar, used to resize the frames, separates the top and bottom frame.

Splityear treatment
You are either resident or not resident in the UK for a whole tax year. However 'splityear' treatment is a concessionary treatment that may be available if you come to, or leave, the UK part of the way through the tax year.

Starting rate tax
For 1999/2000 the starting rate of income tax is 10%. You pay tax at the starting rate (10%) on the first £1,500 of your taxable income (the starting rate band), at the basic rate (23%) on any income between £1,500 and £28,000 (the basic rate band), and tax at the higher rate (40%) on any income in excess of £28,000. However, you do not pay basic r …

State Earnings Related Pension
You will receive an increased state pension if you are a contractedin employee earning above the national insurance lower earnings limit.

State pensions
Pensions paid to you by the Department of Social Security. Your entitlement depends on national insurance contributions you have made and whether you have contributed towards an earnings related pension.

State retirement pension
A pension women are entitled to from age 60 and men from age 65. It is paid by the Department of Social Security.

Statement of account
Statement that you will receive from the Inland Revenue showing the payments of tax you are to pay as well as any payments you have already made to the Inland Revenue.

Statutory maternity pay
Paid to you if you are on maternity leave because you are pregnant or have recently had a baby. Normally paid by your employer, but occasionally paid by the Department of Social Security.

Statutory sick pay
Paid to you if you are unable to work because of sickness. Normally paid by your employer but occasionally paid by the Department of Social Security.

Step by Step Interview
Completing your Tax Return stepbystep by answering several sets of interview questions. TaxSaver then uses your answers to these questions to complete the appropriate Inland Revenue Forms.

Raw materials used in your business for and goods bought for resale, which you have on hand.

Stock dividends
A dividend which you have elected to receive in shares instead of cash.

Stock or scrip dividends
A dividend which you have elected to receive in shares instead of cash.

Stock raw
Unprocessed materials bought in by a business for processing (manufacturing).

People who carry out work for other people. The term is usually used to refer to workers in the building industry. Tax is deducted at source from payments for labour made to subcontractors in the construction industry unless the subcontractor has an exemption certificate.

Amounts you pay regularly to belong to a trade union or association, professional body or club.

Surplus allowance
The unused part of your married couple's allowance and/or blind person's allowance that arises because of insufficient income. It can be transferred to your spouse.

Taper relief
Relief given for capital gains purposes by scaling down the gain on the disposal of an asset by reference to the period of ownership of that asset after 5 April 1998.

Tax assessment
Before self assessment was introduced, the Inland Revenue calculated your tax and then issued a tax assessment showing any tax you owed. These types of assessments are now not normally issued. An assessment may be issued if you have omitted income from your Tax Return if the deadline for raising enquiries by the Inland Revenue has passed.

Tax code
Your tax code (also called you PAYE code) enables your allowances to be taken into account when calculating the tax to be deducted from your pay under the PAYE (Pay As You Earn) scheme. The code number is constructed by adding the allowances available and deducting benefits in kind from which tax cannot be deducted, and other untaxed income. It can …

Tax credit
Although tax is not actually deducted from certain types of income, you may be given a tax credit as if tax had actually been deducted. For example, you are given a lower rate tax credit on dividends you receive. The dividend you receive being treated as the net amount (after deduction of the tax credit).

Tax credit relief
Relief you may claim for foreign tax paid. The relief is given by deducting the foreign tax paid from the UK tax payable on the foreign income.

Tax deducted
Tax which has been deducted from any income before the income is paid to you. This is known as receiving the 'net income '. The tax deducted is paid to the Inland Revenue. For example, tax is deducted from your salary under PAYE and from interest paid to you by banks and building societies.

Tax deduction certificate
Shows the tax deducted from the income you have received, such as tax deducted from interest you received on cash deposits during the tax year or trust income you received. You may have to complete a tax deduction certificate for charitable covenants that you pay, or payments you make under the Gift Aid scheme.

Tax freeincome
Income which is not liable to income tax.

Tax month
The period running from the 6th day of the month to the 5th day of the following month.

Tax office
The Inland Revenue has many tax offices situated around the UK. Your records will be held by one tax office which may not be geographically close to you. You can visit any tax enquiry centre for advice or to pay your tax.

Tax preparation expenses
The expenses incurred in preparing tax computations and returns such as those by a Tax Advisor or accountant. The cost of preparing tax computations for your business or for your property letting, may be deducted from your income as allowable expenses.

Tax rebate
A refund of tax due to you.

Tax year
The year running from 6 April one year to 5 April the following year. The tax year 1999/2000 is the year ending on 5 April 2000.

Income and gains are taxable if they are liable to income tax or capital gains tax under the tax statutes.

Taxable benefit
A benefit which is included as part of your taxable income, and is liable to income tax.

Taxable income
Income which you are taxed on by the Inland Revenue. The term is often used to refer to your total taxable income, which is the aggregate of all your income less deductions and reliefs, and then minus your personal allowances.

Income and gains are tax free if they are exempt from income tax and capital gains tax. Examples are income from Personal Equity Plans, interest from TESSAs, interest on National Savings certificates, lottery prizes and so on. Taxfree gains include gains on your home (subject to certain restrictions), cars, shares held in personal equity plans and …

Taxfree slice
Expression often used to refer to a portion of income or gains which is covered by an exemption whilst the balance of the income is taxable.

Taxpayer's charter
Document issued by the Inland Revenue in which they set out your rights and obligations as a taxpayer and their rights and obligations to you.

Temporary workplace
A workplace which you attend to perform a short term task or other temporary purpose. A workplace is not temporary if you expect to have to attend there for a period in excess of 24 months and to carry out a reasonable proportion of your employment duties there.

Acronym for 'Tax Exempt Special Savings Account'. You may pay up to £9,000 into a TESSA account over a 5 year period. Provided the account is maintained for 5 years and that you withdraw no more than the interest on the account, subject to a deduction equivalent to lower rate tax, the interest is tax free. No new TESSAs may be opened after 5 April …

Tools of trade
Equipment which traders use to carry out their trade.

Topslicing relief
A tax relief given where, for instance, you receive a payment on a life insurance policy which has been in force for several years. The relief is given by charging tax on the whole gain at the rate of tax that would have applied had only one year's worth of the gain been taxed.

Total income
The sum of your income from all sources, earned and unearned, less any reliefs and deductions which you are entitled to claim, but before deducting personal allowances (these are deducted later).

Alternative name for business. Any activity commercially run with a view to making a profit will normally be treated as a trade.

Trade creditors
Money you owe other businesses for goods or services you have received, but which remain unpaid at your accounting date.

Trade debtors
Money you are owed for goods you have sold or work you have done that is included in turnover, but remains unpaid at your accounting date.

Trade union
Organised association of workmen formed for their protection and promotion of common interests.

Instruction given to you to develop skills that will help you in your employment, present or future.

Training courses
Courses on which you receive instruction either to improve your work skills or to give you professional or vocational qualifications.

Transitional allowance
An allowance which was first given to married women in 1990/91 if their husbands were on low income. It was given to compensate for the fall in allowances that would otherwise have resulted on the introduction of independent taxation. It may still be claimed provided the woman has been entitled to it in every year since 1990/91 because of her husba …

Travel and subsistence
Payments made to you for the cost of travelling whilst on business and for the cost of meals, refreshments and accommodation on business trips.

An arrangement where trustees (those responsible for the trust) hold assets for the benefit of particular people (the beneficiaries). The trust deed will set out how the trustees must deal with the income and capital of the trust.

Trust distributions
Payments made to you from a trust. Normally payments are made out of income, and so taxable, but you may also receive payments of capital (which are not taxable).

Money earned by your business before deducting any business expenses. it includes receipts in cask or in kind for goods sold or work done, commission, fees receivable, tips, insurance proceeds for loss of stock and profits, and so on. It does not include Business StartUp Allowance (or Enterprise Allowance). Also, do not include amounts received fro …

UK life insurance policies
Life insurance policies which are issued by insurance companies based in the UK.

UK savings and investments
Amounts which you have set aside from your income over the years and invested within the UK. Generally refers to deposits made with a bank or building society, and to investments in shares, unit trusts and so on. Does not include land and property held as an investment.

Unapproved share option schemes
Schemes where you may be granted options to buy shares, but which have not been approved by the Inland Revenue. Approved schemes are approved savings related share option schemes, approved profit sharing schemes and approved discretionary share option schemes.

Unapproved share options
Options that enable you to buy shares at a set price, at a set time or within a set period, but which have not been granted under schemes approved by the Inland Revenue. Approved schemes are approved savings related share option schemes, approved profit sharing schemes and approved discretionary share option schemes.

Unearned income
Unearned income is income which you have not earned by working. It includes dividends from shares you own, interest on savings and most income from land and property. Income from furnished holiday lettings is, however, treated as earned income.

You are unemployed if you are not working, either as an employee or as a person who is selfemployed.

Unindexed gain-loss
The capital gain or loss on the sale of an asset before deducting the indexation allowance.

Unit trust
A unit trust is a trust that invests its funds in a spread of equities or fixed interest securities. A professional manger runs the portfolio. You buy units in the unit trust, the amount you pay being added into the unit trust's funds. The price you pay for the units is based on the value of the unit trust's investments. You can sell your units bac …

Unlisted shares are shares that are not listed on a stock exchange.

Unpaid tax
Tax which has not been paid to the Inland Revenue although it is due for payment.

Unquoted trading company
A company which trades and is not quoted on a recognised stock exchange. Companies which hold assets for long term gain are not trading companies (they are investments companies). Most private companies are unquoted trading companies.

Value added tax (VAT)
A tax which must be charged by VAT registered businesses on goods and services which they supply. VAT is administered by HM Customs and Excise, not the Inland Revenue. Registered businesses must pay to HM Customs and Excise any VAT that they charge on their sales (outputs), but can normally deduct VAT they have paid on goods purchased for the busin …

Acronym for Venture Capital Trust.

Venture capital trust
A Venture Capital Trust (VCT) is a quoted company which invests in unquoted trading companies. You can buy shares in VCT rather than in the underlying companies, thereby spreading your risk. To encourage investment of this type, various tax reliefs are given by the Inland Revenue if you invest in an approved VCT.

Vocational training
Training you undertake to obtain National Vocational Qualifications or Scottish Vocational Qualifications, under certain full time courses lasting for at least four weeks.

Entitles you to cash, and/or to goods and services. Often provided to you free by your employer, in which case they are taxable.

Wear and tear
An allowance that is tax deductible for the cost of furniture and fittings provided in dwelling houses which are let out furnished.

A woman who was married but whose husband has died.

Widow's bereavement allowance
The extra allowance a widow receives in the tax year of her husband's death, and the following tax year.

Widow's pension
A pension you receive from the Department of Social Security following the death of your husband, provided you were aged between 45 and 65 when your husband died or when you ceased to be entitled to a widowed mother's allowance. It is reduced if you were then under the age of 55. If your husband was employed, you might also be entitled to a widow's …

Widowed mother's allowance
A pension you receive from the Department of Social Security following the death of your husband provided you are aged between 45 and 60 and you have children or are pregnant.

A man who was married but whose wife has died.

Withholding tax
Foreign tax which is deducted in the foreign country when income is paid to you.

Work in progress
Partially manufactured stock you have on hand, or partially completed work on contracts under which you provide your service.

Work related expenses
Expenses which you incur in carrying out your employment.

Working families tax credit
A form of social security family income supplement, payable to families where one or more persons are in employment and have a PAYE code. The benefit is normally awarded for a period of twenty six weeks. From October 1999 payments were made directly by the Inland Revenue but from April 2000 employers of claimants will be instructed to make payments …

Writing down allowances
Capital allowances given against tax for the cost of certain fixed assets on a year by year basis. May be replaced by first year allowances in the year the expenditure is incurred, and by a balancing allowance or balancing charge in the year the asset is sold.

Written down value
The cost of an asset, such as a car, after deducting amounts written off. For tax purposes it is the cost less capital allowances given to date. The expenditure on items of plant and machinery may be pooled to facilitate the calculation of capital allowances. In this case the written down value will be the total of expenditure incurred, less any pr …