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Digita - Finance Glossary Category: Economy and Finance Date & country: 19/01/2008, UK Words: 512

pension income
Regular payments you receive from a pension fund.

pension scheme
A scheme which you pay pension contributions to. The company running the scheme then invests the money and pays you a pension when you retire. An approved pension scheme has various tax exemptions.

pension contributions
Payments you make out of earnings or profits to a pension scheme. This may be your employer's pension scheme, or your own retirement annuity contract or personal pension plan. In return you will receive a pension once you have retired. Contributions are tax deductible.

pension carry forward relief
If you are not in a company pension scheme and you have not paid the maximum contributions to your retirement annuity contract or personal pension plan, the unused tax relief can be carried forward for up to six years. Contributions in a later tax year will be set first against the current year's amount of relief (based on net relevant earnings) be …

pension
A pension is a regular payment to you from a pension scheme once you have retired or have reached an age when you are entitled to draw that pension.

payroll giving
A scheme which gives you tax relief for payments you make to a registered charity. The payments are deducted from your pay by your employer and paid to a charitable agency. You can then choose which charities you wish to make donations to. For the tax year 1999/2000 up to £1,200 may be given under the scheme and tax relief is given by deducting the …

payment on account
A tax payment made during the year 'on account' based on your last years final tax liability (tax owed for the prior tax year). A repayment or further liability arises when you complete your Tax Return and finalise the year's tax due.

PAYE settlement agreement
An arrangement under which your employer pays any income tax due on certain benefits and expenses payments. It is intended to be used for minor and irregular expenses and benefits and for those payments and expenses where it is impractical to account for the tax in any other way. Items included in a PAYE settlement agreement are not included on you …

PAYE code
Your 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 also be adjusted to collec …

PAYE
Acronym for Pay As You Earn. PAYE is the system under which your employer deducts income tax from your pay during the year. It is a sophisticated system as it takes into account your personal allowances and the different tax rates and tax bands. The tax deducted must be shown on your payslip each pay day, and on the P45 which is given to you when y …

pay as you earn
PAYE is the system under which your employer deducts income tax from your pay during the year. It is a sophisticated system as it takes into account your personal allowances and the different tax rates and tax bands. The tax deducted must be shown on your payslip each pay day, and on the P45 which is given to you when you leave that employment, or …

overseas
A country other than England, Northern Ireland, Scotland and Wales.

partnership
A relationship between two or more people who are in business together.

overlap relief
Tax relief that is given for overlap profits brought forward. It is given on a change of accounting date if the basis period is longer than12 months or on the cessation of trade.

overlap profit
Profit which has been taxed twice because part of an accounting period falls within the basis period for more than one year.

outgoing
Monies you have to pay to someone else for things linked to your income. You may be able to deduct them from your income for tax purposes.

other qualifying loan interest
You can receive tax relief on interest paid on loans that you take out for certain specific purposes. These include loans for: * Buying shares in a close company * Purchasing an interest in a partnership or contributing partnership capital * Purchasing machinery or plant for use in your employment or partnership.

other pensions
Pensions paid by anyone apart from those paid by the Government.

other income from land and property
Any property income (other than rents) that you receive from any source, such as wayleaves, payments from sporting rights and so on.

other income
This is a 'catch all' term to ensure that you declare all your taxable income which you have not already entered anywhere else on the Tax Return.

other benefits (employment)
The more common other benefits which are received in an employment are: * Relocation expenses * Subscriptions and professional fees * Assets provided for private use * Provision of nursery places (sometimes this is not taxable).

ordinary commuting
Travel between home (or some other place you attend for private reasons) and a permanent workplace.

option
The right to buy or sell something at a set price within a given time period. Employees for example, may be granted options to purchase shares in the company that employs them.

ordinarily resident
If you are resident in the UK year after year, you are 'ordinarily resident'.

offshore funds
Investments which are made outside the UK.

opening written down value
Cost of an asset at the start of the accounting period after deducting capital allowances given in earlier accounting periods. The closing written down value will be the opening written down value, less capital allowances given in the accounting period. This will be the opening written down value for the following accounting period. Where expenditu …

offset
To set one amount against another, such as a loss against a profit or a repayment against a liability.

occupational pension
A pension you receive from a previous employer.

office holder
Someone who occupies a particular position or office. Includes directors, judges, ministers of religion, members of parliament and so on.

notional tax
Notional tax is tax which is treated as having been paid, but which is not repayable under any circumstance. It applies to UK life insurance policy gains, dividends and some other income sources.

notice of coding
The notification of your PAYE code that you receive from the Inland Revenue.

not resident
You are not resident in the UK if you spend less than half the year in the UK, or if you spend less than 3 months of each year in the UK on average.

not ordinarily resident
If you are not resident in the UK year after year, you are not ordinarily resident.

not domiciled
Broadly, you will not be UK Domiciled if you were born outside the UK and/or you do not consider the UK to be your permanent home.

non-resident trusts
These are trusts that are controlled by trustees who are not UK residents.

non-taxpayer
Someone who does not pay tax because their income is too low.

non-resident
Someone who is not resident in the UK for tax purposes.

non-repayable
Something which cannot be repaid under any circumstances, such as notional tax credits on dividends.

non-qualifying distributions
A bonus issue by a company of securities or redeemable shares, or the paying on by a company of such a bonus that it has received. Non-qualifying distributions are taxable, but you are treated as if you had paid savings rate tax on the amount of the non-qualifying distribution.

nominee
A person who holds assets for another person.

No terms
There are no terms in the glossary starting with k

net relevant earnings
Your taxable earnings from your self-employment, or from an employment where you are not a member of your employer's pension scheme. You may make contributions to a retirement annuity contract or personal pension plan, up to a percentage of your net relevant earnings. The percentage limits are based on your age, and differ between retirement annuit …

net
The amount received after the deduction of tax. May also be used to refer to income after the deduction of expenses.

national savings ordinary account
An instant access account offered by national savings which is backed by HM Treasury. You can deposit and withdraw funds from post offices. The first £70 of interest earned is tax free, but the account pays a low rate of interest.

national savings
A savings organisation backed by HM Treasury which offers a number of different savings products. Information on these is available from your local Post Office as well as from National Savings.

national insurance number
A unique reference number which is used to identify your national insurance contribution record and entitlement to social security benefits.

national insurance
A scheme which provides pensions and other social security benefits. Some benefits are dependent on contributions you have paid, whilst other benefits are means tested. Employees pay higher contributions and have a greater entitlement to benefits than do the self-employed. Contributions are also payable by employers.

name at Lloyd's
Someone who pledges assets to Lloyd's in return for sharing the underwriting of profits and losses.

motoring costs - the simpler basis
The simpler basis of calculating your motoring costs allows you to use mileage rates published by the Inland Revenue, 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.

motoring costs - the exact basis
The exact basis of calculating your motoring costs involves adding up the total motoring expenses incurred over the tax year (such as fuel, servicing, repairs and so on), and apportioning the costs between business and private use on the basis of mileage.

mortgage
A long-term loan, which is secured on property, generally your main home. You receive 10% tax relief on the interest on loans used to purchase your home up to a value of £30,000. Tax relief is withdrawn from 6 April 2000.

money's worth
The cash value of something you receive - the amount for which you would sell it, not the loss to the person providing it.

money payments
Payments that are made in cash or equivalent.

mobile telephone
Any telephone not connected to a landline. It includes a car phone, whether or not it is fixed to the car, but does not include a cordless phone which is an extension of a landline.

MIRAS
Acronym for Mortgage Interest Relief At Source. Abolished from 6 April 2000.

mixed business asset
An asset that has been used for both business and non business purposes.

millennium gift aid
One off payments of £100 or more made to certain registered charities that are participating in this scheme. The funds must be used for education projects or for the relief of poverty in third world countries. The charity reclaims the basic rate of tax you have deducted and you receive higher rate tax relief if you have sufficient income. (When fir …

medical insurance
In return for a premium, you will receive prompt private medical attention.

mileage allowance
An allowance paid to you by your employer for travelling. It is based on the number of business miles you travel and is paid at a rate fixed by your employer.

master-servant relationship
Means that you are told what your daily or weekly duties are. Often determines whether you are employed or self employed.

marriage
A man and woman legally living together as husband and wife.

married couple's allowance
An extra tax allowance you are entitled to if you are married. Withdrawn from 6 April 2000 except for certain circumstances for people over 65.

market value
The price which you can obtain for an asset if you sold it freely on the open market.

maintenance and alimony received
Amounts you receive under a legally binding agreement from a former spouse who is no longer living with you, or from your parent if you are under the age of 21. You may have to pay tax on some or all of the amount you receive.

maintenance and alimony payments
Amounts you pay under a legally binding agreement to a former spouse who is no longer living with you, or to or for your child. You may be able to claim tax relief for these payments.

maintenance
A payment made to a former spouse or child, following divorce or legal separation. Tax relief may be claimed by the payee while the amount may have to be included in the taxable income for the recipient.

main residence
The place where you normally live and consider to be your home. You can only have one main residence for capital gains tax purposes.

magazines, books and references
If you are self employed, the cost of these is tax deductible provided they are used wholly and exclusively for business purposes. If you are employed by a third party, it is very difficult to get tax relief as they must be bought 'wholly, exclusively and necessarily' in the performance of the employment.

loss
A loss arises when the income or proceeds received are less than the expenses or cost. There are detailed rules on how tax relief can be claimed on losses.

loans written off
A loan is written off where it is agreed that the debt will never be collected. If a company makes a loan to you and writes it off, a tax charge may arise. If you make a loan to a company and the company collapses, you might be able to claim a capital gains tax loss.

loans
A sum of money lent to another party who agrees to repay the capital lent over a period of time and usually to pay interest on the outstanding balance.

living together
A man and woman living together in the same manner as a married couple would.

literary income
Income received by an author.

living accommodation
Any accommodation in which you can live. This includes not only houses, flats and so on, but also houseboats, holiday cottages and villas. It does not include hotels or bed and breakfast accommodation.

life insurance policies
Policies which will pay a lump sum to a beneficiary or your executors on your death. Some policies also have an investment content which means that when the policy comes to an end, you will receive a payment whether or not you have died.

life insurance
A life insurance policy will probably only pay out following your death. Some policies have a death and investment content. If the death benefits are written under trust, they are not included in your estate for Inheritance Tax purposes.

LIBOR
Acronym for London Inter Bank Offer Rate. This is the rate charged by banks on loans between themselves.

lettings
Land or property leased to another person.

let property
Property that you allow someone else to use, usually in return for the payment of rent. You may own the property yourself, or you may lease it from a landlord, and sublet it to your tenant.

legatees
A legatee is someone who receives assets from the estate of a deceased person, whether under the terms of the will, or under the intestacy rules. You may be a specific legatee, where the assets you receive are specified in the will, or a residuary legatee, where you receive a share of what is left after paying inheritance tax, expenses and specific …

legal expenses
Some legal costs qualify as allowable expenses for income tax or capital gains tax purposes. You should ask your solicitor or a Tax Adviser for help if you are not sure what legal costs qualify.

leaving payments
Payments made to you when you leave your employment. They are generally taxable if made under the terms of your contract of employment, but there are tax reliefs for payments resulting from an accident at work, from foreign service and for the first £30,000 of compensation payments.

lease or rental expenses
Where property or land is let, you can set most expenses for the letting and upkeep of the land or property against the rental income. Expenses include some legal costs, accountancy fees, repairs and so on.

land
Ground which has been built on, is used for a purpose or is let out for such things as farming, forestry and so on.

joint tenancy
If you own land and property with one or more persons, your ownership is normally a joint tenancy. On the death of a joint tenant, their share automatically passes to the other joint tenants. Alternatively you may own the property as tenants in common. In this case you can leave your share of the property to someone else in your Will. In Scotland t …

jobseeker's allowance
A benefit paid by the Department of Social Security (DSS) if you are unemployed, but are available for and actively seeking employment. You will have entered into a 'Jobseeker's agreement' with the DSS.

investments
Assets you buy either to profit from or to own for a long time. These can include shares, land and property, a pension or your home.

investment income
Income generated from assets such as shares, land and property, cash deposits and so on.

invalid care allowance
This allowance is paid if you spend at least 35 hours per week caring for a disabled person who receives certain state benefits. It will not be paid if you are also working and earning over the means tested limit.

intestacy
If a person dies without leaving a will, the assets of the deceased's estate pass under the intestacy rules. These vary according to whether or not there is a surviving spouse, or surviving children, parents, brothers and sisters and so on. If a person's will does not deal with all of the assets of the estate, there may be a partial intestacy. The …

interest on other qualifying loans
You can receive tax relief on interest paid on certain loans. These include loans for buying shares in a close company, purchasing an interest or introducing capital in a partnership, paying inheritance tax and purchasing machinery or plant.

interest
Money you pay on a loan or receive if you have cash deposits. Note that personal overdraft interest or credit or charge card interest is not tax deductible.

interest distribution
Payments by a company or unit trust in the form of interest rather than as a dividend distribution. Your tax voucher will specify the nature of the distribution.

insurance premiums
Something you pay to cover yourself against a negligence claim, loss of profits due to a catastrophe or damage (or destruction) to your assets.

insurance payouts
Something you receive following the maturity of an insurance policy or a claim for theft, fire, or loss of profits and so on due to a catastrophe.

Inland Revenue
The government department which controls the collection of income tax, capital gains tax, inheritance tax and so on. From 6 April 1999 the Contributions Agency (which dealt with the collection of national insurance contributions) has become an Inland Revenue department, (the National Insurance Contributions Office).

inheritance tax
A tax payable on your assets when you die. No inheritance tax is payable if your total assets, including your home, are worth less than £231,000. This figure changed in the March 2000 Budget to £234,000. If your assets are worth more than £234,000, 40% tax is payable on the excess over £234,000. Some lifetime gifts may be liable to inheritance tax, …

inheritance
Something you receive from a deceased relative or friend. Inheritances are received free of income tax and capital gains tax and should not be entered on your Tax Return.

industrial death benefit pension
A benefit paid by the Department of Social Security to a widow if her husband dies as a result of an accident at work or from a 'prescribed industrial disease'. This benefit was abolished for deaths occurring on or after 11 April 1988.

individual savings account
A tax free investment vehicle available from 6 April 1999 which allows you to invest in stocks and shares and life assurance policies, or to hold cash. It replaces personal equity plans (PEPs) and TESSAs. The income and gains will be tax free. There is no minimum holding period in an ISA to qualify for tax relief, but amounts of capital withdrawn c …