UK Tax Glossary (2026/27)

A plain-English A to Z of 158 UK tax and employment terms for the 2026/27 tax year. Each entry sets out what the term means, the figures that apply for 2026/27, and where relevant a one-click link to the calculator or explainer that lets you put the rule into practice.

The glossary covers Income Tax, National Insurance, PAYE, Self Assessment, dividends, pensions, ISAs, Capital Gains Tax, Inheritance Tax, Stamp Duty (SDLT, LBTT and LTT), VAT, and the administrative machinery around them - tax codes, P45 / P60 / P11D, RTI, payments on account, penalties, tribunals and ADR. Every numerical claim ties back to the 2026/27 TaxRuleset cited in this page's article schema, which in turn references the gov.uk URLs listed at the foot of the page.

Use the A to Z jump-bar below to skip to a letter. Within each section, terms are alphabetised. If a definition links to a calculator or longer explainer on this site, the link sits at the end of the paragraph.

A

Accrual Basis

The traditional accounting method that recognises income when earned and expenses when incurred, regardless of cash movement. Debtors and creditors are tracked. Required for UK companies under Companies Act 2006 and for sole traders / partnerships above the Cash Basis turnover threshold. Slightly more complex than Cash Basis but allows full year-on-year matching of revenue and costs, which is essential where significant work-in-progress or stock is held. View calculator: Accrual Basis.

Additional Rate

The top band of UK Income Tax for the rest of the United Kingdom (excluding Scotland). For 2026/27 the Additional Rate is 45% and applies to taxable income above £125,140. Scotland uses a separate Top Rate of 48% from the same threshold. Dividends in the additional band are taxed at 39.35%. The Additional Rate threshold has been frozen since April 2023. View explainer: Additional Rate.

Adjusted Net Income

An HMRC-defined measure of total taxable income for specific clawback rules. Calculated as total income minus pension contributions made under Relief at Source (grossed-up at 1.25), minus Gift Aid donations (grossed-up at 1.25), minus certain trading losses. ANI determines whether HICBC applies (£60,000-£80,000 taper) and whether the Personal Allowance is tapered (£100,000-£125,140). Reducing ANI is the standard mitigation lever for both traps. View explainer: Adjusted Net Income.

ADR (Alternative Dispute Resolution)

A free, voluntary mediation service HMRC offers to resolve a tax dispute without going to the First-tier Tribunal. A trained HMRC mediator (independent of the case officer) facilitates a structured conversation between taxpayer and caseworker. ADR is most useful when the dispute is about facts, evidence or communication breakdown rather than a pure point of law.

AEA (Annual Exempt Amount)

The yearly tax-free allowance for Capital Gains Tax. For 2026/27 the AEA is £3,000 for individuals and personal representatives, and £1,500 for most trusts. Gains above the AEA are taxed at 18% (basic rate) or 24% (higher rate) for general assets. The AEA was cut sharply from £12,300 in 2022/23 to £6,000 in 2023/24 and £3,000 from 2024/25. View calculator: AEA (Annual Exempt Amount).

Allowable Expenses

Costs deductible from income for tax purposes. For the self-employed and partnerships, expenses must be "wholly and exclusively" for business use. Typical allowable expenses are stock, materials, rent, utilities (apportioned for home use), insurance, professional fees, travel (excluding ordinary commuting), and capital allowances on plant. Disallowable items include client entertainment, depreciation (replaced by capital allowances), and personal expenditure. View calculator: Allowable Expenses.

Annual Allowance

The cap on the total pension contributions (employee, employer and any salary-sacrifice) that can attract tax relief in a single tax year. The standard Annual Allowance for 2026/27 is £60,000. Exceeding it triggers an Annual Allowance Charge at the saver's marginal rate. Carry Forward allows unused allowance from the previous three tax years to be brought forward. View calculator: Annual Allowance.

Annual Exemption (IHT)

The £3,000 of gifts an individual can make each tax year that fall immediately outside the Inheritance Tax net - not classified as Potentially Exempt Transfers. Unused exemption from the previous year can be carried forward by one year only, so the maximum that can be gifted exempt in a single year is £6,000 (per person). Spouses each have their own annual exemption. View calculator: Annual Exemption (IHT).

Annual Investment Allowance (AIA)

A capital allowance that lets businesses deduct 100% of qualifying plant and machinery spend from taxable profit in the year of purchase. The AIA is permanently set at £1,000,000 a year. It is available to sole traders, partnerships and companies, though group rules apply. Cars are excluded from AIA but qualify for separate Writing Down Allowances. View calculator: Annual Investment Allowance (AIA).

Apprenticeship Levy

A 0.5% payroll tax on UK employers whose annual pay bill exceeds £3,000,000. The £15,000 annual allowance means employers only start paying the Levy once their pay bill clears the £3 million mark. Funds collected are returned via the Apprenticeship Service to spend on training; unspent levy expires after 24 months and is transferred to non-levy-paying employers. View calculator: Apprenticeship Levy.

ATED (Annual Tax on Enveloped Dwellings)

An annual charge on UK residential properties worth over £500,000 that are owned by a company, partnership with a corporate member, or collective investment scheme ("enveloped"). Bands range from £4,400 a year for £500,000-£1m properties up to £303,500 a year above £20m for 2026/27. Reliefs exist for genuine property rental, development and trading businesses, but a return must still be filed.

Auto-Enrolment

The statutory duty on UK employers to enrol eligible workers (aged 22 to State Pension age, earning over £10,000) into a qualifying workplace pension. Minimum total contributions are 8% of qualifying earnings - 3% from the employer, 4% from the employee, and 1% from basic-rate tax relief. Workers can opt out within one month and receive a refund; outside that window the employee contribution stays in the pot. View explainer: Auto-Enrolment.

B

Balancing Payment

The final settlement of any Self Assessment liability still outstanding after the two Payments on Account have been made. Due by 31 January following the tax year end, the Balancing Payment also includes the first Payment on Account for the new tax year. Underpayment from the previous year may instead be collected through PAYE the following tax year if under £3,000 and requested by 30 December. View explainer: Balancing Payment.

Basic Rate

The 20% Income Tax rate that applies to most working-age UK employees on the first slice of taxable income above the Personal Allowance. For 2026/27 the Basic Rate band covers taxable income from £12,571 to £50,270 for England, Wales and Northern Ireland. Dividends in the Basic Rate band are taxed at 8.75%. Scotland uses a different banding with a separate Basic Rate of 20% over a narrower window.

Benefit in Kind (BIK)

A non-cash benefit an employer provides to an employee that is taxable on the employee. Common BIKs are company car, private medical insurance, beneficial loans above £10,000, employer-provided accommodation, and gym membership paid for by the employer. Each BIK has its own valuation rules. Employer reports the cash equivalent on a P11D (or via payrolling) and pays Class 1A NIC at 15% on the value for 2026/27. View calculator: Benefit in Kind (BIK).

Bonus Tax

Bonus pay is taxed at the employee's marginal Income Tax rate plus normal Class 1 NIC - there is no separate "bonus tax". Because PAYE is cumulative, a one-off bonus may push the period's pay above a band threshold for that month, but the overall annual position reconciles itself. A bonus that takes monthly pay above the UEL crosses from 8% to 2% NIC for the excess, which surprises many bonus recipients. View calculator: Bonus Tax.

BR Code

A PAYE tax code that deducts Income Tax at the Basic Rate (20%) on every pound of earnings from that employment, with no Personal Allowance. BR is normal for a second job or a pension drawn alongside paid work; it is wrong if applied to your only or main job and will trigger over-deduction until HMRC issues the correct cumulative code via P800 or a coding notice. View explainer: BR Code.

Budget 2026

The Chancellor's Autumn 2025 Budget statement set the policy framework for 2026/27. Key measures included continued threshold freezes through 2027/28, dividend allowance held at £500, ISA limits unchanged at £20,000, and the State Pension uprating via the triple lock. The detailed summary on this site walks through each change and the calculator pages where the new figures apply. View explainer: Budget 2026.

Business Asset Disposal Relief (BADR)

Formerly Entrepreneurs' Relief, BADR reduces the CGT rate on qualifying gains from the sale of a business, business assets or shares in a personal trading company to 14% (from April 2025; rising to 18% in April 2026). The lifetime limit is £1 million of qualifying gains. The taxpayer must hold at least 5% of ordinary share capital and voting rights for two years before disposal. View calculator: Business Asset Disposal Relief (BADR).

C

Capital Allowances

The tax relief businesses claim on qualifying capital expenditure - plant, machinery, vehicles, integral features - that would otherwise not be deductible because capital spend cannot be deducted as a revenue expense. The three main pools are AIA (100% first year up to £1m), Full Expensing (100% on new and unused main-rate plant for companies), and Writing Down Allowances (18% main pool, 6% special rate). View calculator: Capital Allowances.

Capital Gains Tax (CGT)

Tax on the profit when an asset that has gone up in value is disposed of (sold, gifted, exchanged or given to a company). For 2026/27 the rates are 18% (basic rate) and 24% (higher rate) for most assets including UK residential property; carried interest follows separate rules. The first £3,000 of gain each tax year is tax-free under the Annual Exempt Amount. Losses can be carried forward indefinitely. View calculator: Capital Gains Tax (CGT).

Carer’s Allowance

A weekly state benefit for people who provide at least 35 hours of care a week to a disabled person receiving certain qualifying benefits. For 2026/27 the rate is £83.30 a week. Carer's Allowance is taxable but does not attract NIC. It is also not means-tested in the traditional sense, but the carer's own weekly earnings (after allowable deductions) must be £196 or below from April 2025 for the benefit to be paid.

Carry Forward

The rule that allows unused pension Annual Allowance from the previous three tax years to be carried forward to the current year, on top of the current £60,000 allowance. The saver must have been a member of a registered pension scheme in each of those earlier years. Carry forward is uncapped in volume but contributions still cannot exceed 100% of relevant UK earnings in the current year for tax relief. View calculator: Carry Forward.

Cash Accounting (VAT)

A VAT scheme that lets businesses with turnover below £1,350,000 account for VAT on the date they receive payment from customers (and pay HMRC) rather than the invoice date. Smooths cash flow and provides automatic bad-debt relief because output VAT is only due once cash is in the bank. Cannot be used for the Flat Rate Scheme or by businesses that issue invoices payable more than six months in advance. View calculator: Cash Accounting (VAT).

Cash Basis (Self-Employed)

An optional simplified method for sole traders and partnerships where income is recognised when received and expenses when paid, ignoring debtors and creditors. From April 2024 cash basis became the default method for unincorporated traders. Limited to £500,000 of interest relief on borrowings, and capital items are still treated via Capital Allowances (Full Expensing is for companies only). View calculator: Cash Basis (Self-Employed).

Cash ISA

An Individual Savings Account holding cash deposits where all interest is tax-free. The combined ISA subscription limit for 2026/27 is £20,000 across Cash, Stocks & Shares, Lifetime and Innovative Finance ISAs. From April 2024 multiple Cash ISAs can be opened with different providers in the same tax year. Withdrawals from a flexible Cash ISA can be replaced without affecting the annual limit. View explainer: Cash ISA.

Child Benefit

A weekly payment to anyone responsible for a child under 16 (or under 20 in approved education or training). For 2026/27 the rates are £26.05 a week for the eldest child and £17.25 for each additional child. Child Benefit is not means-tested at the point of payment but is clawed back via the High Income Child Benefit Charge when the higher earner in the household earns above £60,000. View explainer: Child Benefit.

CIS (Construction Industry Scheme)

HMRC's tax deduction scheme for the UK construction sector. Contractors deduct 20% (or 30% if the subcontractor is not registered) from subcontractor payments and pay it directly to HMRC as a payment on account of the subcontractor's eventual Income Tax and NIC liability. Net-paid status (0% deduction) requires meeting business, turnover and compliance tests. View calculator: CIS (Construction Industry Scheme).

Class 1 NIC

National Insurance paid by employees and employers on earnings from employment. For 2026/27 the employee main rate is 8% on earnings between the Primary Threshold (£12,570 a year) and the Upper Earnings Limit (£50,270), and 2% above. Employer NIC is 15% on earnings above the Secondary Threshold of £5,000 a year. Calculated per pay period, not cumulatively. View explainer: Class 1 NIC.

Class 1A NIC

Employer-only NIC charged on the cash equivalent of taxable Benefits in Kind (P11D items) that are not already subject to Class 1 NIC. For 2026/27 the rate is 15%, paid annually by 22 July following the tax year end (electronic) or 19 July (paper). Class 1A applies to most BIKs - company cars, private medical insurance, fuel benefit - but excludes payrolled benefits, which attract Class 1 alongside cash pay. View calculator: Class 1A NIC.

Class 1B NIC

Employer-only NIC on items included in a PAYE Settlement Agreement (PSA) - the mechanism by which employers settle the tax and NIC liability on small, irregular, or impracticable-to-allocate benefits (e.g. staff parties above the £150 head, taxi fares home after late working). The rate is 15% for 2026/27, paid in October following the tax year end. The PSA itself must be agreed with HMRC before the start of the tax year.

Class 2 NIC

Historically a flat weekly NIC paid by self-employed earners. From April 2024 Class 2 has effectively been abolished as a charge: profits above the Lower Profits Threshold (£12,570) earn the NI credit toward State Pension automatically, while traders below the Small Profits Threshold (£6,725) can still pay voluntary Class 2 at £3.50 a week to protect their contribution record. View calculator: Class 2 NIC.

Class 3 NIC

Voluntary NIC paid by individuals to fill gaps in their National Insurance record for State Pension purposes. The 2026/27 rate is £17.75 a week (£923 a year). Buying a missing year typically costs around £900 and adds roughly £6 a week to State Pension entitlement - a payback in under three years of pension receipt. Backdating beyond six years is normally not allowed; transitional rules allowed wider gaps until April 2025.

Class 4 NIC

National Insurance paid by the self-employed on annual taxable profits. For 2026/27 the rates are 6% between the Lower Profits Limit (£12,570) and the Upper Profits Limit (£50,270), and 2% on profits above that. Collected through Self Assessment alongside Income Tax. Trading losses can be offset against Class 4 NIC profits but not against employment earnings. View calculator: Class 4 NIC.

Closure Notice

The formal HMRC notice that ends an enquiry into a Self Assessment, Corporation Tax or VAT return. It records HMRC's final view, any adjustments to the return, and the resulting additional tax (or refund). A taxpayer who disagrees has 30 days to request a Statutory Review or appeal directly to the First-tier Tribunal.

Coding Notice

The HMRC document (form P2) that tells a PAYE taxpayer their tax code for the coming year and explains how it was calculated. Lists the Personal Allowance, any deductions (untaxed interest, taxable benefits, prior-year underpayments) and additions (allowable expenses). Checking the Coding Notice each March is the simplest way to catch errors before they reduce monthly take-home for 12 months. View explainer: Coding Notice.

Corporation Tax

The tax on the profits of UK-resident companies, plus UK branches of foreign companies. For 2026/27 the main rate is 25% on profits above £250,000, a Small Profits Rate of 19% applies to profits below £50,000, and Marginal Relief tapers the effective rate between those thresholds. Pay nine months and one day after the accounting period end (or in quarterly instalments for large companies). View calculator: Corporation Tax.

Cumulative Tax Code

The default operation of PAYE Income Tax: each pay period the system calculates total tax due on year-to-date earnings, then deducts the period's tax as the difference between that and tax already paid. The cumulative method automatically reconciles bonuses, pay rises, and unused Personal Allowance over the year. The alternative is Week 1 / Month 1, used as an emergency measure. View explainer: Cumulative Tax Code.

D

D0 Code

A PAYE tax code that taxes every pound of that employment's earnings at the Higher Rate (40%) with no Personal Allowance. Common for a high-paid second job where the first job already uses the full Personal Allowance and is in the basic-rate band. D0 over-deducts if the main employment uses less than the full Personal Allowance; D1 is the equivalent for the Additional Rate at 45%. View explainer: D0 Code.

D1 Code

A PAYE tax code that taxes every pound of that employment's earnings at the Additional Rate (45% for the rest of the UK; 48% Top Rate in Scotland) with no Personal Allowance. Used where total income is solidly into the Additional Rate band and the secondary employer needs to apply the top rate from the first pound. Compared to D0, D1 simply moves the flat rate up to 45%. View explainer: D1 Code.

Director's Loan

A loan from a company to one of its directors (or vice versa) that creates separate tax consequences for both parties. If the director owes the company more than £10,000 at any point, the difference between HMRC's official interest rate and any actual interest paid is a taxable Benefit in Kind. Unpaid balances at the year end trigger a 33.75% s455 corporation tax charge, refundable when repaid.

Discovery Assessment

An assessment HMRC issues outside the normal enquiry window where it later "discovers" that a tax loss has arisen due to careless or deliberate behaviour, or because the loss could not reasonably have been expected to be known at the original enquiry close. Time limits are four years for careless behaviour, six years where careless mistake led to under-assessment, and 20 years for deliberate behaviour.

Dividend

A distribution of post-tax profit by a UK-resident company to its shareholders, paid out of distributable reserves. Dividends are not deductible from corporation tax (unlike salary). Recipients pay Income Tax on dividends above the Dividend Allowance at rates of 8.75% (basic), 33.75% (higher) and 39.35% (additional) for 2026/27. Within an ISA, SIPP or pension, dividends are tax-free. View calculator: Dividend.

Dividend Allowance

The tax-free slice of dividend income for individuals - £500 for 2026/27. Dividends within this allowance still count toward total income (so they can push other income into a higher band) but no Income Tax is due on them. The allowance was cut from £2,000 to £1,000 in 2023/24 and to £500 from 2024/25. View explainer: Dividend Allowance.

Domicile

A legal concept distinct from residence and nationality, determining how an individual is treated for UK Inheritance Tax and historically for the remittance basis of Income Tax. From April 2025 the UK abolished the non-dom remittance basis and replaced it with a residence-based regime; UK-domiciled or deemed-domiciled status now matters primarily for IHT, where worldwide assets fall into the UK net once an individual has been resident for 10 of the previous 20 years.

E

EIS (Enterprise Investment Scheme)

A UK tax-advantaged scheme that gives investors 30% Income Tax relief on up to £1 million a year (£2 million if at least £1 million goes into knowledge-intensive companies) invested in qualifying small unlisted companies. Gains on EIS shares held for three years are CGT-free, and CGT on other assets can be deferred by reinvesting into EIS. Loss relief is also available against income, making the after-tax downside much smaller than the gross investment.

Emergency Tax

The Week 1 / Month 1 operation of a PAYE tax code, typically 1257L W1/M1 or 0T W1/M1, that HMRC uses when an employer has not received a P45 or starter checklist with full prior-year history. Tax is calculated for each period in isolation, ignoring year-to-date. Often over-deducts during the first months of a new job; reconciled automatically once HMRC issues the correct cumulative code. View explainer: Emergency Tax.

Employer NIC

Class 1 Secondary National Insurance paid by employers on top of an employee's gross wages. For 2026/27 the rate is 15% on earnings above the Secondary Threshold of £5,000 a year. Employer NIC is fully deductible from corporation tax and is the largest single overhead premium on UK employment - a £35,000 hire actually costs the employer around £39,500 a year in payroll-related taxes. View calculator: Employer NIC.

Employment Allowance

An annual offset against employer Class 1 Secondary NIC. For 2026/27 the Employment Allowance is £10,500 (raised from £5,000 in April 2025) and is available to employers with total Class 1 NIC liability below the de minimis cap. Companies where a single director is the only employee are excluded. Claimed via PAYE software and applied each pay period until the £10,500 is exhausted. View explainer: Employment Allowance.

Entrepreneurs' Relief

The pre-2020 name for Business Asset Disposal Relief. Originally introduced in 2008 with a £1m lifetime limit and 10% CGT rate on qualifying disposals; the lifetime limit was raised to £10m in 2011 and then reduced to £1m in March 2020 when the relief was renamed. The 10% rate rises to 14% in April 2025 and 18% in April 2026 under Budget 2024 measures. View calculator: Entrepreneurs' Relief.

Exempt (VAT)

Supplies that fall completely outside the scope of VAT - no output VAT is charged and no input VAT can be reclaimed on related costs. The main exempt categories are insurance, finance, postal services, education, health and welfare, and most land transactions. Different from Zero-Rated supplies, where output VAT is 0% but input VAT remains reclaimable. View calculator: Exempt (VAT).

F

First-Time Buyer Relief

Stamp Duty (SDLT) relief for individuals buying their first residential property to live in. Available in England and Northern Ireland: 0% on the first £300,000 and 5% on the next £200,000, provided the purchase price is at or below £500,000. Scotland's LBTT has its own first-time buyer relief (0% to £175,000). Wales' LTT no longer offers separate FTB relief - the residential nil-rate band of £225,000 applies to all buyers. View explainer: First-Time Buyer Relief.

Flat Rate Scheme (VAT)

A simplified VAT scheme for businesses with VAT-exclusive turnover under £150,000 a year. Instead of accounting for input VAT on each purchase, the business pays a single flat percentage of its VAT-inclusive turnover, set by trade sector (typically 6.5% to 14.5%). Businesses with low-cost-trader spend below 2% of turnover pay 16.5%. Best for service businesses with minimal VAT-bearing costs. View calculator: Flat Rate Scheme (VAT).

Fuel Benefit Charge

An additional Benefit in Kind charge when an employer provides free fuel for private use in a company car. For 2026/27 the multiplier is £28,200 multiplied by the car's BIK percentage (based on CO2 emissions and fuel type). For most company-car users with private fuel, the Fuel Benefit Charge is poor value once private mileage drops below roughly 8,000 miles a year - employees often opt out and reclaim business mileage separately at approved rates. View calculator: Fuel Benefit Charge.

Full Expensing

A 100% first-year capital allowance available to incorporated companies (not sole traders or partnerships) on qualifying new and unused main-pool plant and machinery. Permanent from April 2026. Sits alongside AIA: most small companies use AIA up to £1m, but Full Expensing has no cap so larger investments above £1m get 100% relief immediately. Special-rate assets get a 50% first-year allowance instead. View calculator: Full Expensing.

G

Gift Aid

A UK tax relief that lets registered charities reclaim 25p of basic-rate Income Tax for every £1 donated by a UK taxpayer. The donor must have paid at least as much Income Tax or CGT as the charity reclaims in that tax year. Higher- and additional-rate donors can also claim the difference between their marginal rate and the basic rate via Self Assessment, lowering the cost of a £100 donation to £60 (40%) or £55 (45%). View explainer: Gift Aid.

H

HICBC (High Income Child Benefit Charge)

A clawback of Child Benefit through Self Assessment where the higher earner in a household has Adjusted Net Income above £60,000. The charge tapers from 0% at £60,000 to 100% at £80,000 - effectively withdrawing all Child Benefit when the higher earner reaches £80,000. From April 2026 the threshold may move to a household basis pending HMRC system changes. View explainer: HICBC (High Income Child Benefit Charge).

Higher Rate

The 40% Income Tax band for the rest of the United Kingdom, applying to taxable income from £50,271 to £125,140 for 2026/27. Scotland uses its own banding with a Higher Rate of 42% on a similar income range. Higher-rate Dividend Tax is 33.75% over the £500 Dividend Allowance. The £50,270 threshold has been frozen since April 2021 and is currently held until April 2028. View explainer: Higher Rate.

HMRC

His Majesty's Revenue and Customs - the UK government department responsible for collecting taxes, paying state benefits, and enforcing tax law. Formed in 2005 from the merger of HM Customs & Excise and the Inland Revenue. HMRC's tax-collection remit covers Income Tax, NIC, Corporation Tax, VAT, Inheritance Tax, Capital Gains Tax, SDLT in England and NI, plus duties on alcohol, tobacco and fuel.

Hold-Over Relief

A CGT relief on gifts of business assets and certain transfers into and out of trusts. The donor and donee jointly elect for the gain to be "held over" - the donee takes the asset at a reduced base cost equal to its market value at the date of the gift less the held-over gain. No CGT is payable now; the gain is rolled into the donee's eventual disposal. Useful for parent-to-child business succession. View calculator: Hold-Over Relief.

I

Inheritance Tax (IHT)

Tax on the value of an estate transferred at death, plus certain lifetime gifts. The main rate is 40% on estates above the £325,000 Nil-Rate Band, reduced to 36% if at least 10% of the net estate is left to charity. A further £175,000 Residence Nil-Rate Band applies when a main home passes to direct descendants. Both nil-rate bands are frozen until April 2030 under Budget 2024 measures. View calculator: Inheritance Tax (IHT).

Innovative Finance ISA

An ISA wrapper holding peer-to-peer lending loans and crowdfunding debt securities, where all interest is tax-free. Shares the combined £20,000 annual ISA subscription limit with Cash, Stocks & Shares and Lifetime ISAs. Capital is at risk - peer-to-peer lending is not covered by FSCS protection. Most providers cap deposits at smaller amounts due to liquidity and concentration limits. View explainer: Innovative Finance ISA.

IR35

The off-payroll working rules in Part 2 of ITEPA 2003 and Chapter 10 ITEPA 2003. When an individual provides services through their own limited company (PSC) but would be an employee of the end client if engaged directly, IR35 reclassifies the payment as employment income, subject to PAYE and NIC. Since April 2021 the end client (or fee-payer) determines status for medium-large engagers; small clients keep the old rules. View explainer: IR35.

ISA

Individual Savings Account - a UK-tax-free savings or investment wrapper. The combined annual subscription limit is £20,000 for 2026/27, split freely between Cash, Stocks & Shares, Lifetime (capped at £4,000), and Innovative Finance ISAs. All interest, dividends and capital gains inside the ISA are exempt from UK Income Tax and CGT. No annual return is required. View explainer: ISA.

J

JISA (Junior ISA)

A long-term tax-free savings wrapper for under-18s. The 2026/27 subscription limit is £9,000 a year. Anyone can pay in - parents, grandparents, friends - but the account is in the child's name and is locked until the child turns 18, when it converts to an adult ISA. JISA limits are separate from the adult £20,000 allowance, and a child can also have a normal Child Trust Fund (legacy product, closed to new entrants since 2011). View explainer: JISA (Junior ISA).

K

K Code

A tax code that begins with a K instead of ending with a letter. K means the employee owes HMRC more in non-coded income (State Pension, large taxable benefits, prior-year underpayments) than the Personal Allowance covers. The number after K is added back to taxable pay as notional extra income; for example K500 adds £5,000 of notional income on top of actual pay each tax year. Maximum K-code deduction is 50% of cash pay. View explainer: K Code.

L

L Suffix

The most common tax code letter, indicating the taxpayer is entitled to the standard Personal Allowance. The full standard code for 2026/27 is 1257L - the number 1257 represents the £12,570 Personal Allowance divided by 10. Other suffixes do exist: M (Marriage Allowance recipient), N (Marriage Allowance giver), T (other adjustments meaning HMRC needs to review), and Y (the legacy higher-PA for over-75s, no longer in use). View explainer: L Suffix.

Late Filing Penalty

The penalty for missing the Self Assessment filing deadline. £100 fixed penalty even if no tax is due, applied from 1 February. After three months, £10 daily penalties accrue for up to 90 days (£900 cap). After six months, the greater of £300 or 5% of tax due is added. After 12 months a further such penalty applies, plus uplifts where HMRC believes the failure was deliberate.

Late Payment Interest

Interest charged by HMRC on tax paid after the due date. The rate is set at the Bank of England base rate plus 2.5% (Income Tax, NIC, Corporation Tax) or plus 4% for repayment supplement parity from April 2025. Interest compounds daily. Separate Late Payment Penalties of 5% apply at 30 days, 6 months and 12 months past due (Self Assessment) for any tax still outstanding.

LBTT (Land and Buildings Transaction Tax)

Scotland's equivalent of SDLT, applied to most land and buildings transactions in Scotland. Bands for residential purchases in 2026/27: 0% up to £145,000, 2% to £250,000, 5% to £325,000, 10% to £750,000, 12% above. First-Time Buyer relief covers up to £175,000. Additional Dwelling Supplement of 8% applies to second homes and buy-to-let. View calculator: LBTT (Land and Buildings Transaction Tax).

Letting Relief

A CGT relief on the sale of a property that has been both a Private Residence and at any point let out. Since April 2020 Letting Relief is only available where the owner shared occupancy with the tenant for part of the let period. The relief is capped at the lower of the PRR figure, the chargeable gain attributable to the let period, and £40,000. View calculator: Letting Relief.

Lifetime Allowance (LTA)

Abolished from 6 April 2024 and replaced by three separate allowances: the £268,275 Lump Sum Allowance, the £1,073,100 Lump Sum and Death Benefit Allowance, and an unlimited Overseas Transfer Allowance (subject to £1,073,100 default). Historic LTA charges are no longer levied. Anyone with prior LTA protections (Fixed 2016, Individual 2016, etc.) keeps the higher figures for the new allowances. View calculator: Lifetime Allowance (LTA).

Lifetime ISA (LISA)

An ISA for UK residents aged 18 to 39, intended for first-home purchase or retirement. Annual subscription limit is £4,000 (counts toward the £20,000 overall ISA limit). The government adds a 25% bonus, up to £1,000 a year. Withdraw for any reason other than a £450,000-or-under first home purchase or after age 60 and there is a 25% withdrawal charge - which more than wipes out the bonus. View explainer: Lifetime ISA (LISA).

Lower Earnings Limit (LEL)

The minimum amount an employee must earn in a pay period to get a National Insurance qualifying year for State Pension purposes. For 2026/27 the LEL is £6,500 a year (£125 a week). Earnings between the LEL and the Primary Threshold (£12,570) do not attract employee NIC but still count toward qualifying years - so a low-paid worker accumulates State Pension entitlement without paying NIC. View explainer: Lower Earnings Limit (LEL).

LTT (Land Transaction Tax)

Wales' equivalent of SDLT, devolved to the Welsh Revenue Authority since April 2018. Bands for residential purchases in 2026/27: 0% to £225,000, 6% to £400,000, 7.5% to £750,000, 10% to £1.5m, 12% above. No First-Time Buyer relief (Wales abolished the relief and instead increased the starting threshold for all buyers). Higher Rate residential supplement of 5% applies to second homes. View calculator: LTT (Land Transaction Tax).

Lump Sum Allowance

One of the post-LTA pension allowances, replacing the old 25% tax-free cash limit. From 6 April 2024 the Lump Sum Allowance is £268,275 - the cumulative cap on tax-free lump sums an individual can take across all registered pension schemes. Anyone holding LTA protection from prior tax years keeps the higher protected figure as their LSA. View calculator: Lump Sum Allowance.

M

M Suffix

A tax code suffix indicating the taxpayer is receiving Marriage Allowance from their spouse or civil partner. Adds 10% to the standard Personal Allowance, so the most common code is 1383M (12,570 + 1,260 = 13,830 ÷ 10) for 2026/27. M is paired with N (the partner giving up 10% of their allowance) and triggered by submitting Form 575 to HMRC. View calculator: M Suffix.

Marginal Rate

The Income Tax (plus NIC) rate that would apply to the next pound of income. The marginal rate is not necessarily the same as the band you sit in - it can jump sharply at certain thresholds because of withdrawn allowances, HICBC, or the loss of Personal Allowance above £100,000. The £100,000-£125,140 band famously carries a 60% marginal rate (40% tax + 20% from lost PA). View calculator: Marginal Rate.

Marriage Allowance

A transferable Income Tax allowance. A non-taxpayer (or someone with income under the Personal Allowance) can transfer £1,260 - 10% of the Personal Allowance - to a basic-rate-paying spouse or civil partner, worth up to £252 a year in tax saved. Cannot be used if the receiving partner is a higher- or additional-rate taxpayer. Can be backdated four tax years. View calculator: Marriage Allowance.

Maternity Allowance (MA)

A state benefit for pregnant women who do not qualify for Statutory Maternity Pay (typically the self-employed or recently-employed). Paid for up to 39 weeks at £187.18 a week or 90% of average weekly earnings, whichever is lower, for 2026/27. Self-employed claimants need 13 weeks of Class 2 NIC in the 66-week test period. MA is taxable but does not attract NIC. View calculator: Maternity Allowance (MA).

MPAA (Money Purchase Annual Allowance)

A reduced pension Annual Allowance that applies once an individual has flexibly accessed a Defined Contribution pension - for example by taking taxable income beyond the 25% tax-free element. The MPAA is £10,000 a year. Carry Forward does not apply once the MPAA is triggered, making it an important consideration before using pension flexibility. View calculator: MPAA (Money Purchase Annual Allowance).

MTD for ITSA

Making Tax Digital for Income Tax Self Assessment - HMRC's requirement that affected sole traders and landlords keep digital records and submit quarterly updates plus an end-of-period statement through compatible software. Phased rollout: from April 2026 for those with self-employment or property income above £50,000, from April 2027 for income above £30,000, and from April 2028 for income above £20,000. View explainer: MTD for ITSA.

N

N Suffix

The tax-code partner of M. N indicates the taxpayer has given up 10% of their Personal Allowance under Marriage Allowance to a spouse or civil partner. The standard code becomes 1131N (12,570 minus 1,260 transferred = 11,310 ÷ 10) for 2026/27. Submitted via the M partner's online application on gov.uk; HMRC issues coding notices to both partners. View calculator: N Suffix.

National Insurance Number

A unique reference (two letters, six digits, one letter, e.g. AB123456C) issued by HMRC at age 16 - or earlier on parental application - and used for life. The NI number is the personal key for State Pension records, NIC contributions, and Universal Credit. It is not formally proof of identity or right to work, but functions as one in many UK administrative contexts.

Net Pay Arrangement

A workplace pension contribution method where the employee's contribution is deducted from gross pay before Income Tax is calculated, giving immediate full marginal-rate tax relief. The drawback: non-taxpayers (typically below the Personal Allowance) get no relief, since they paid no tax in the first place. The government plans to top up these losers from 2025/26 with a flat 20% rebate. View explainer: Net Pay Arrangement.

Nil-Rate Band (IHT)

The slice of an estate's value taxed at 0% Inheritance Tax. The standard Nil-Rate Band is £325,000 a person and has been frozen since April 2009. Unused NRB can be transferred to a surviving spouse or civil partner, so a married couple effectively share £650,000 of NRB. Both the standard NRB and the £175,000 Residence Nil-Rate Band are now frozen until April 2030. View calculator: Nil-Rate Band (IHT).

Non-Dom (Non-Domiciled)

Historically, a UK-resident individual whose domicile of origin or choice was outside the UK could elect the remittance basis - paying UK tax only on foreign income and gains brought into the UK. From 6 April 2025 the regime is replaced by a four-year Foreign Income and Gains (FIG) regime for new UK residents, with full worldwide taxation thereafter. The change removed a long-standing tax planning route for internationally mobile high earners.

NT Code

A PAYE tax code that deducts no Income Tax at all. Used in narrow circumstances such as non-UK-resident employees, seafarers' Seafarers' Earnings Deduction, certain double-tax-treaty cases, and individuals subject to a bankruptcy where any tax has been settled through the bankruptcy estate. NIC may still be due on the same earnings. If NT appears in error, take-home goes up temporarily and HMRC will reclaim the under-deduction. View explainer: NT Code.

O

Off-Payroll Working

The post-2021 IR35 regime that shifts status-determination responsibility to the end client when a contractor works through a personal service company. The end client issues a Status Determination Statement; if "inside IR35" the deemed employer (usually the fee-payer in the chain) must operate PAYE and Class 1 NIC on the contract value. Small client exemption keeps responsibility with the contractor. View explainer: Off-Payroll Working.

OT Code

A PAYE tax code applying zero Personal Allowance and operating cumulatively across all bands - the first pound of pay is taxed at 20%, with the band thresholds otherwise normal. Common as a starter code when no P45 is provided and the new starter declares "this is my main job" but cannot be allocated the standard Personal Allowance because of incomplete prior-year history. View explainer: OT Code.

P

P11D

The HMRC form an employer files annually (by 6 July) listing each employee's taxable Benefits in Kind - company car, private medical insurance, beneficial loans, accommodation. Each P11D figure converts to taxable income for the employee, usually collected by adjusting the next year's PAYE code. From April 2026 P11Ds will be replaced by mandatory payrolling of benefits for most employers. View calculator: P11D.

P45

The four-part HMRC document an employer issues when an employee leaves. Parts 1 and 1A go to HMRC; Parts 2 and 3 are handed to the leaver to give to their next employer. It records the date of leaving, total pay and tax in the tax year to date, and the leaving tax code. Without a P45, the new employer must use a Starter Checklist and a Week 1 / Month 1 emergency code until HMRC catches up. View explainer: P45.

P46

The historic name for the form a new employee filled in if they did not have a P45 from a previous employer. Replaced in April 2013 by the Starter Checklist when Real Time Information (RTI) PAYE reporting went live. The function is unchanged: the new employee declares whether this is their first job in the tax year, their only job, or an additional job, and the employer sets an appropriate starter tax code.

P60

The end-of-tax-year summary an employer must give every employee still on payroll on 5 April. Issued by 31 May, the P60 confirms total taxable pay, total Income Tax deducted, total NIC, student loan deductions, and the closing tax code. Keep P60s for at least 22 months after the relevant tax year (HMRC's normal enquiry window) and longer if you have outstanding loans or claims. View explainer: P60.

P800

An end-of-year tax calculation HMRC sends to PAYE-only taxpayers when its records show an over- or under-deduction during the year. P800s are issued from June to October following the tax year end. Overpayments can be claimed online via the Personal Tax Account, typically refunded by BACS within five working days. Underpayments under £3,000 are usually collected by adjusting the next year's PAYE code; larger amounts may trigger a Simple Assessment.

PAYE (Pay As You Earn)

The UK system for deducting Income Tax and Class 1 NIC from employees' pay at source. Run by employers and reported to HMRC in real time (RTI) each time payroll runs. The employer applies the tax code HMRC has supplied to calculate the period's tax and NI, deducts the figures from gross pay, and pays HMRC monthly (or quarterly for small employers). View explainer: PAYE (Pay As You Earn).

Payment on Account

An advance payment toward next year's Self Assessment liability. Two instalments are due, on 31 January and 31 July, each equal to 50% of the prior year's total tax liability. Payments on Account apply where last year's bill exceeded £1,000 and at least 20% of the tax was not paid via PAYE. Can be reduced via a claim if expected current-year income is lower; over-reduction triggers interest. View explainer: Payment on Account.

Payslip

The itemised statement of pay an employer must give every employee at or before payday under Section 8 of the Employment Rights Act 1996. Must show gross pay, all deductions (Income Tax, NIC, pension, student loan, court orders, voluntary deductions), and net pay. Where the worker is paid by reference to time, hours must be itemised. Electronic payslips are valid. View explainer: Payslip.

Pension Contribution

Any payment made into a registered UK pension scheme by the member, their employer, or a third party. Tax relief is the headline incentive: at the member's marginal Income Tax rate (paid up-front in Net Pay or salary sacrifice, claimed back in Relief at Source). Total relievable contributions are capped at 100% of relevant UK earnings, with the £60,000 Annual Allowance and MPAA / Tapered AA reducing the cap further in some cases. View calculator: Pension Contribution.

Personal Allowance

The amount of income an individual can receive each tax year before any Income Tax is due. For 2026/27 the Personal Allowance is £12,570, frozen since April 2021 and currently held until April 2028. Reduced by £1 for every £2 of Adjusted Net Income above £100,000 (fully withdrawn at £125,140) - the mechanism behind the 60% tax trap. View explainer: Personal Allowance.

Personal Savings Allowance

A nil rate of tax on a band of savings income (bank interest, gilts, corporate bonds outside an ISA). For 2026/27 the allowance is £1,000 for basic-rate taxpayers, £500 for higher-rate, and £0 for additional-rate taxpayers. Distinct from the Starting Rate for Savings, which is up to a further £5,000 of savings income at 0% for those with low non-savings income. View explainer: Personal Savings Allowance.

Personal Tax Account

The HMRC online portal where individuals check their tax code, view P60 / P45 history, manage Self Assessment, claim refunds, update personal details, check State Pension forecast and NI record, and use Marriage Allowance. Sign-in requires a Government Gateway user ID and identity verification through GOV.UK One Login. Most non-business tax tasks for individuals can now be completed entirely in the PTA without phoning HMRC.

Primary Threshold

The earnings level at which employees start paying Class 1 main-rate NIC. For 2026/27 the Primary Threshold is £12,570 a year (£1,048 a month, £242 a week) - now aligned with the Income Tax Personal Allowance. Earnings between the Lower Earnings Limit and the Primary Threshold attract 0% employee NIC but still count toward State Pension qualifying years. View explainer: Primary Threshold.

Private Residence Relief (PRR)

The Capital Gains Tax relief that exempts the gain on the disposal of a property that has been the seller's main residence throughout ownership. Where the property has been the main residence for only part of the period, PRR is given proportionally, plus a final-period bonus (currently nine months) that always counts as occupation. The owner can elect which of two or more residences is "main" within a two-year window of acquiring the second. View calculator: Private Residence Relief (PRR).

Property Allowance

A £1,000 tax-free allowance for property rental income. Where gross rental income is at or below £1,000 a year, no tax is due and no Self Assessment is needed. Where income exceeds £1,000, the taxpayer can choose between deducting actual allowable expenses or claiming the flat £1,000 allowance instead. Cannot be combined with Rent-a-Room Relief on the same income. View calculator: Property Allowance.

Q

Qualifying Earnings

The earnings band used to calculate the minimum auto-enrolment pension contribution. For 2026/27 the band runs from £6,240 to £50,270. Total minimum contribution is 8% of earnings within the band - 3% employer, 4% employee, 1% tax relief at source. Many employers improve on the statutory minimum by using full pay rather than just the qualifying-earnings slice. View explainer: Qualifying Earnings.

Quick Succession Relief

An Inheritance Tax relief that reduces the IHT bill on an estate when assets have been inherited and then the second owner dies within five years. The relief tapers - 100% if the second death is within one year, then 80%, 60%, 40% and 20% across the next four years - and is calculated by reference to the IHT actually paid on the first death. Aimed at preventing double-IHT on the same asset within a short window. View calculator: Quick Succession Relief.

R

Reasonable Excuse

The statutory defence HMRC accepts against late-filing or late-payment penalties. Categories that HMRC normally accepts include serious illness, bereavement of a close relative around the deadline, postal disruption, HMRC system outage, or a fire / flood preventing access to records. Lack of funds and reliance on a paid agent generally do not constitute reasonable excuse. The taxpayer must remedy the failure as soon as the excuse ceases.

Reduced Rate (VAT)

The 5% VAT rate applied to a specific set of supplies: domestic fuel and power, energy-saving materials installed in dwellings, children's car seats, certain mobility aids for the elderly, and women's sanitary products (the latter were zero-rated from January 2021). Different from Zero-Rated supplies, which are taxed at 0% but otherwise treated as standard taxable for input-VAT recovery. View calculator: Reduced Rate (VAT).

Redundancy Pay

The statutory or contractual payment due when an employee is dismissed by reason of redundancy. Statutory redundancy: 0.5 weeks' pay per year worked under age 22, 1 week per year between 22 and 41, and 1.5 weeks per year above 41 (maximum 20 years counted; weekly cap £719 for 2026/27). The first £30,000 of any redundancy payment is Income Tax and NIC free; above that, normal tax applies. View calculator: Redundancy Pay.

Relief at Source (RAS)

A pension contribution method - typical of personal pensions, SIPPs and most workplace stakeholder schemes - where the employee pays the contribution from net (post-tax) pay, and the provider claims back basic-rate (20%) tax from HMRC and adds it to the pot. Higher- and additional-rate taxpayers claim the remaining 20% or 25% relief via Self Assessment. Non-taxpayers still get the 20% basic-rate top-up. View explainer: Relief at Source (RAS).

Rent-a-Room Relief

A tax exemption on the first £7,500 a year of gross income from letting furnished accommodation in your only or main home. Where total annual income exceeds £7,500, the homeowner can choose to deduct actual expenses or pay tax on the gross income above £7,500 with no expense deduction. The relief is split £3,750 each where two people receive the income. Cannot be claimed together with the £1,000 Property Allowance.

Residence Nil-Rate Band (RNRB)

An additional Inheritance Tax allowance available when a "qualifying residential interest" - typically the family home - is left to direct descendants (children, grandchildren, step-children, adopted, fostered). The RNRB is £175,000 a person for 2026/27, frozen until April 2030. Tapered withdrawal of £1 for every £2 above a £2 million net estate fully removes RNRB at a £2.35 million estate. View calculator: Residence Nil-Rate Band (RNRB).

RTI (Real Time Information)

The PAYE reporting regime live since April 2013 under which employers submit a Full Payment Submission (FPS) to HMRC on or before each payday, plus an Employer Payment Summary (EPS) where adjustments or no-payment reports are needed. RTI replaced the year-end-only P35 / P14 returns and lets HMRC update tax codes mid-year as soon as it has the latest payment data.

S

S&S ISA (Stocks & Shares ISA)

An ISA wrapper holding listed equities, funds, investment trusts, ETFs, and certain corporate bonds. All dividends, interest and capital gains inside the wrapper are exempt from UK Income Tax and CGT. Shares the £20,000 annual ISA subscription limit with Cash, Lifetime and Innovative Finance ISAs. From April 2024 multiple S&S ISAs can be opened in the same tax year. View explainer: S&S ISA (Stocks & Shares ISA).

Salary Sacrifice

A contractual variation under which an employee gives up part of their gross salary in exchange for a non-cash benefit - most commonly an employer pension contribution, EV lease, cycle-to-work, or workplace nursery. The sacrificed pay never enters taxable earnings, so the employee saves Income Tax and employee NIC; the employer also saves Class 1 secondary NIC, often shared back with the employee. View calculator: Salary Sacrifice.

SAP (Statutory Adoption Pay)

Employer-paid statutory pay during adoption leave, paid on the same terms as SMP. Available to one adopter (the other parent may take Paternity Leave or Shared Parental Leave). 39 weeks of pay: 6 weeks at 90% of average weekly earnings, then 33 weeks at the lesser of 90% AWE or £187.18 a week for 2026/27. Qualifying conditions are 26 weeks of continuous service ending with the week the adopter is matched. View calculator: SAP (Statutory Adoption Pay).

Scottish Income Tax

Income Tax bands and rates that apply to Scottish-resident taxpayers (PAYE code S-prefix). For 2026/27 the bands are 19% Starter (£12,571-£15,397), 20% Basic (£15,398-£27,491), 21% Intermediate (£27,492-£43,662), 42% Higher (£43,663-£75,000), 45% Advanced (£75,001-£125,140) and 48% Top (above £125,140). The Personal Allowance is reserved to the UK government and remains £12,570 for Scottish taxpayers. View calculator: Scottish Income Tax.

SDLT (Stamp Duty Land Tax)

The tax on land and property purchases in England and Northern Ireland. Residential bands from April 2025 are 0% up to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m, 12% above. First-Time Buyer relief gives 0% up to £300,000 (and 5% from £300,000 to £500,000) on purchases at or below £500,000. Additional 5% surcharge on second homes and buy-to-let. View calculator: SDLT (Stamp Duty Land Tax).

Secondary Threshold

The earnings level at which employers start paying Class 1 Secondary NIC. From April 2025 the Secondary Threshold dropped to £5,000 a year, down from £9,100. This change significantly increased the cost of low-paid employment for businesses, partially offset by the Employment Allowance, which gives eligible employers up to £10,500 off their annual NIC bill for 2026/27. View explainer: Secondary Threshold.

SEIS (Seed Enterprise Investment Scheme)

A tax-advantaged investment scheme for very early-stage UK companies. Investors get 50% Income Tax relief on up to £200,000 a year, CGT exemption on shares held for three years, 50% CGT reinvestment relief on other gains used to fund SEIS shares, and full loss relief on failure. Reflects the higher risk - SEIS companies are typically pre-revenue start-ups with under £350,000 of prior funding and under three years of trading.

Self Assessment

The system through which individuals report income that has not been taxed at source - self-employment, untaxed interest, dividends, property, capital gains, foreign income, or any liability where PAYE under-collects. The return (SA100 plus relevant supplementary pages) covers the tax year to 5 April and must be filed online by 31 January following or on paper by 31 October. View explainer: Self Assessment.

Self Assessment Deadline

Two main filing deadlines apply each Self Assessment cycle: 31 October following the tax year for paper returns, and 31 January following for online returns. The same 31 January date is the payment deadline for the previous year's Balancing Payment and the first Payment on Account for the new year. The second Payment on Account is due by 31 July. Missing 31 January triggers a £100 fixed penalty even if no tax is owed. View explainer: Self Assessment Deadline.

Self Employed

The HMRC status that applies when an individual carries on a trade, profession or vocation on their own account, bears the financial risk, and is not subject to the control of an employer in the way the work is done. Self-employed earnings are reported on Self Assessment, with Class 4 NIC (and previously Class 2) on profits. Distinct from working through a personal service company (subject to IR35). View calculator: Self Employed.

SMP (Statutory Maternity Pay)

Employer-paid statutory pay during maternity leave, available to employees with 26 weeks' continuous service by the 15th week before the expected week of childbirth and average weekly earnings at or above the LEL. Paid for 39 weeks: 6 weeks at 90% of average weekly earnings, then 33 weeks at the lesser of 90% AWE or £187.18 a week for 2026/27. View calculator: SMP (Statutory Maternity Pay).

Sole Trader

An individual carrying on a business in their own name (or under a trading name not constituted as a separate legal entity). There is no legal separation between owner and business - debts of the business are personal debts. Profits are taxed via Self Assessment as trading income, subject to Income Tax and Class 4 NIC. The simplest UK business form, suitable for low-risk solo businesses. View calculator: Sole Trader.

SPL (Shared Parental Leave)

A leave entitlement that lets eligible parents share up to 50 weeks of leave and up to 37 weeks of pay in the year after a child's birth or adoption. Statutory Shared Parental Pay (ShPP) is paid at the lesser of £187.18 a week or 90% of average weekly earnings for 2026/27. Designed to let mothers transfer unused SMP to a partner, increasing flexibility in early childcare. View calculator: SPL (Shared Parental Leave).

SPP (Statutory Paternity Pay)

Employer-paid statutory pay for new fathers and partners taking Paternity Leave. Available for one or two consecutive weeks within 52 weeks of the child's birth or adoption placement. Paid at the lesser of £187.18 a week or 90% of average weekly earnings for 2026/27. Qualifying conditions: 26 weeks of continuous employment by the 15th week before the expected week of childbirth, and average weekly earnings at or above the LEL. View calculator: SPP (Statutory Paternity Pay).

Spring Statement

The Chancellor's annual fiscal forecast update, typically delivered in March. Unlike the Autumn Budget, the Spring Statement is meant to be a forecast-only event with no major tax measures - though in practice several recent Statements have included substantive policy changes. New Office for Budget Responsibility projections are published alongside the speech.

SSP (Statutory Sick Pay)

The minimum amount employers must pay employees who are off work sick for at least four consecutive days. For 2026/27 SSP is £118.75 a week for up to 28 weeks. Paid through normal payroll and subject to PAYE Income Tax and NIC. Employees must earn at least the Lower Earnings Limit (£125 a week) to qualify. Many employer schemes pay enhanced sick pay above the statutory minimum. View calculator: SSP (Statutory Sick Pay).

Standard Rate (VAT)

The default UK VAT rate of 20%, applied to most goods and services. The standard rate was last changed in January 2011 (from 17.5%) and has been 20% ever since. Standard-rated supplies trigger full input-VAT recovery on related business costs. The threshold for compulsory VAT registration is £90,000 of taxable turnover in a rolling 12-month window for 2026/27. View calculator: Standard Rate (VAT).

Starting Rate for Savings

A 0% Income Tax rate on up to £5,000 of savings income (interest) - available where non-savings income is at or below the Personal Allowance. Tapers by £1 for every £1 of non-savings income above the Personal Allowance: fully used up at non-savings income of £17,570 (Personal Allowance plus the £5,000 band). Useful for retirees living on pension and interest. View explainer: Starting Rate for Savings.

State Pension

The UK government's contributory retirement pension, available from State Pension age (currently 66, rising to 67 between 2026 and 2028). The new State Pension full rate for 2026/27 is £230.25 a week (£11,973 a year) for those reaching SPA after 6 April 2016. Requires 35 qualifying NIC years for the full amount; pro-rata down to 10 minimum years. Triple-locked: rises by the highest of CPI, wages, or 2.5%. View calculator: State Pension.

Statutory Review

A free, formal HMRC review of an appealable decision, conducted by an officer not previously involved in the case. Available within 30 days of HMRC's decision letter. Provides an independent second view before the matter goes to the First-tier Tribunal. The reviewer can uphold, vary or cancel the decision; the taxpayer keeps the right to appeal to the Tribunal within 30 days of the review conclusion.

Student Loan

Income-contingent UK student loans administered by the Student Loans Company. Repayment is collected through PAYE or Self Assessment once income exceeds the plan-specific threshold: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745, Plan 5 £25,000, Postgraduate £21,000. Repayment rate is 9% above the threshold (6% on Postgraduate). Loans are written off after a plan-specific period. View calculator: Student Loan.

T

Taper Relief (IHT)

An Inheritance Tax relief that reduces the tax on Potentially Exempt Transfers (lifetime gifts) where the donor dies between three and seven years after the gift. Taper applies on a sliding scale: 20% reduction at 3-4 years, 40% at 4-5 years, 60% at 5-6 years, 80% at 6-7 years. After seven years the gift is fully exempt. Note taper applies to the IHT, not the gift value itself. View calculator: Taper Relief (IHT).

Tapered Annual Allowance

A reduced pension Annual Allowance for very high earners. Where Adjusted Income exceeds £260,000 and Threshold Income exceeds £200,000, the standard £60,000 Annual Allowance is tapered by £1 for every £2 above £260,000, down to a minimum Annual Allowance of £10,000 at Adjusted Income of £360,000 or more. The £10,000 floor was raised from £4,000 in April 2023. View calculator: Tapered Annual Allowance.

Tapered Personal Allowance

The withdrawal of the £12,570 Personal Allowance for individuals with Adjusted Net Income above £100,000. The allowance is reduced by £1 for every £2 of ANI above £100,000, fully removed at £125,140. This taper creates the famous 60% effective marginal rate band - £1 of extra pay attracts 40% Income Tax plus 50p of withdrawn allowance taxed at 40%, giving a 60p effective tax per £1 earned. View calculator: Tapered Personal Allowance.

Tax Code

A short identifier HMRC issues to each employee that tells the employer how much tax-free Personal Allowance applies and which band rates apply. For 2026/27 the standard code is 1257L. Prefix letters S and C designate Scottish and Welsh taxpayers; suffix letters L, M, N, T, K, W1/M1, BR, 0T, D0, D1, NT each carry distinct rules. The full glossary lives at the linked explainer. View explainer: Tax Code.

Tax Trap (60%)

The colloquial name for the 60% effective marginal tax band between £100,000 and £125,140 of Adjusted Net Income, caused by the Personal Allowance taper interacting with the Higher Rate. A £1 pay rise inside the trap attracts 40p Income Tax and surrenders 50p of Personal Allowance, taxed at 40p, for a 60p combined tax cost. Pension contributions are the standard mitigation - they reduce ANI £-for-£. View explainer: Tax Trap (60%).

Tax Tribunal (First-tier)

The independent judicial body that hears appeals against HMRC tax decisions. Cases are categorised by complexity (Default Paper, Basic, Standard, Complex). Filing fee is zero. The taxpayer has 30 days from the HMRC decision or Statutory Review conclusion to appeal. Appeals from First-tier Tribunal decisions go to the Upper Tribunal (Tax and Chancery Chamber), then to the Court of Appeal and Supreme Court on points of law.

Tax Week / Month

HMRC's payroll calendar. The tax year runs from 6 April to 5 April. Tax Week 1 starts on 6 April, so weekly payrolls cycle through 52 weeks (or 53 in a year where the calendar dates align). Tax Month 1 covers 6 April to 5 May; Tax Month 12 covers 6 March to 5 April. Tax week and month numbers drive the cumulative PAYE calculation. View explainer: Tax Week / Month.

Tax-Free Allowance

A collective shorthand for the Personal Allowance (£12,570 of income), the Personal Savings Allowance (£0-£1,000 of interest depending on band), the £500 Dividend Allowance, the £20,000 ISA subscription limit, the £3,000 Capital Gains AEA, and Marriage Allowance (£1,260 transfer). Stacking these correctly is the foundation of UK personal tax planning. View explainer: Tax-Free Allowance.

Tax-Free Childcare

A government top-up scheme for working parents: for every £8 a parent pays into a childcare account, the government adds £2, up to £2,000 a year per child (£4,000 for disabled children). Parents must earn at least the equivalent of 16 hours a week at National Living Wage and under £100,000 each (joint income limits not applied). Replaces the legacy Childcare Voucher scheme, closed to new entrants since October 2018.

Trading Allowance

A £1,000 tax-free allowance for trading and miscellaneous income. Where gross trading income is at or below £1,000 a year, no tax is due and no Self Assessment is needed. Above £1,000, the taxpayer can choose between deducting actual allowable expenses or claiming the flat £1,000 allowance instead. Designed for side hustles and casual self-employment; cannot be combined with actual-expense deduction or used against partnership income. View calculator: Trading Allowance.

Tronc

An arrangement under which an independent troncmaster (not the employer) operates a separate PAYE scheme to distribute tips, gratuities and service charges to hospitality workers. A genuine tronc puts the distribution outside Class 1 NIC for both employee and employer (Income Tax still applies). Since October 2024 the Tipping Act requires 100% of tips to go to staff without deductions. View calculator: Tronc.

Two Jobs

Working multiple PAYE employments at the same time. HMRC allocates the Personal Allowance to the main employment (code typically 1257L) and uses BR (20%), D0 (40%) or D1 (45%) on the second. Class 1 NIC primary thresholds apply per employment, so very low earners can cross the NIC threshold separately in each job. The combined position is reconciled at year end if necessary. View calculator: Two Jobs.

U

Universal Credit

A means-tested benefit replacing six legacy benefits (Income Support, JSA-IB, ESA-IR, Housing Benefit, Working Tax Credit, Child Tax Credit). For 2026/27 the standard allowance is £400.14 a month for a single adult over 25, with additional elements for housing, children, disability and caring. Earnings taper at 55p per £1 of net earned income above the work allowance.

Upper Earnings Limit (UEL)

The earnings threshold above which employee Class 1 NIC drops from the 8% main rate to the 2% upper rate. For 2026/27 the UEL is £50,270 a year (£4,189 a month, £967 a week) - aligned with the Higher Rate Income Tax threshold. Calculated per pay period, not cumulatively, so a single-month bonus that lifts pay above £4,189 only briefly switches to the 2% rate for that period. View explainer: Upper Earnings Limit (UEL).

Upper Profits Limit (UPL)

The Class 4 NIC equivalent of the UEL: the level of self-employed profit above which the NIC rate drops from 6% to 2%. For 2026/27 the UPL is £50,270 of annual profit. Below the Lower Profits Limit of £12,570, no Class 4 NIC is due; between £12,570 and £50,270 the rate is 6%; above £50,270 the rate is 2%. View calculator: Upper Profits Limit (UPL).

UTR (Unique Taxpayer Reference)

A 10-digit reference HMRC issues to individuals who register for Self Assessment, and separately to companies for Corporation Tax. The UTR appears on every Self Assessment correspondence, the SA100 return, and any payment reference. Must be quoted alongside any tax payment so HMRC posts the money to the right account. Issued automatically on first SA registration; lost UTRs are recoverable through the Personal Tax Account.

V

VAT (Value Added Tax)

A consumption tax charged on most goods and services sold in the UK by VAT-registered businesses. The standard rate is 20%, reduced rate 5%, and zero rate 0% (alongside exempt and outside-scope categories). Compulsory registration kicks in at £90,000 taxable turnover in a rolling 12-month window. VAT-registered businesses charge output VAT, reclaim input VAT on costs, and pay the net to HMRC quarterly under MTD for VAT. View calculator: VAT (Value Added Tax).

VAT MOSS

Mini One-Stop Shop - a VAT registration scheme for businesses supplying digital services to consumers across multiple EU member states. UK-based businesses had access to MOSS until Brexit transition end (December 2020); post-Brexit they typically register either in a single EU member state under the non-Union OSS or follow each customer-state's local rules. UK-to-UK digital sales remain on the normal UK VAT regime. View calculator: VAT MOSS.

VAT Registration Threshold

The level of taxable turnover at which a UK business must register for VAT. From 1 April 2024 the threshold is £90,000 of taxable turnover in a rolling 12-month window (raised from £85,000). The de-registration threshold is £88,000. Voluntary registration is available below the threshold and may make sense where the business is selling to other VAT-registered customers (who can reclaim the VAT) or where input VAT recovery on business inputs is material. View calculator: VAT Registration Threshold.

VCT (Venture Capital Trust)

A listed investment company that invests in qualifying small unlisted UK companies. Investors get 30% Income Tax relief on up to £200,000 a year of new VCT shares (must be held for five years), tax-free dividends from the VCT, and CGT exemption on disposals. Aimed at investors comfortable with higher risk in exchange for the upfront Income Tax shelter. The 30% Income Tax relief is the largest in the UK's investor reliefs portfolio.

W

Week 1 / Month 1

An emergency PAYE tax-code suffix that tells the employer to treat each pay period in isolation, ignoring year-to-date totals. Often appears as 1257L W1 or 1257L M1 in HR systems. Usual triggers are a missing P45, a starter checklist suggesting another job, or HMRC's holding code while it processes a new tax code. Frequently over-taxes during the first months of a new employment; corrects once cumulative code arrives. View explainer: Week 1 / Month 1.

Writing Down Allowance (WDA)

The Capital Allowance given each year on the residual unrelieved cost of plant and machinery once AIA and Full Expensing have been claimed. The main pool rate is 18% a year on a reducing-balance basis; the special-rate pool (long-life assets, integral features, thermal insulation) is 6% a year. Cars are pooled separately by CO2 emissions - 18% main pool, 6% special rate, 100% First-Year Allowance for new zero-emission cars. View calculator: Writing Down Allowance (WDA).

Z

Zero Rate (VAT)

Supplies taxed at 0% VAT but still treated as taxable - the business charges 0% output VAT but can recover all input VAT on related costs. Key zero-rated categories include most food (excluding catering), books and printed matter, children's clothing, public transport, new dwellings, prescription medicines, and women's sanitary products. Critically different from Exempt supplies, where no input VAT is recoverable. View calculator: Zero Rate (VAT).

Sources

Every figure cited in this glossary is the statutory 2026/27 amount, traceable to the public-sector sources below. Where a number is set out in our internal TaxRuleset (rates, thresholds, allowances, NIC bands), the underlying gov.uk citations are listed in the page's structured-data citation array.

Income Tax: gov.uk/income-tax-rates
National Insurance: gov.uk/national-insurance-rates-letters
Tax codes: gov.uk/tax-codes
Self Assessment: gov.uk/self-assessment-tax-returns
Capital Gains Tax: gov.uk/capital-gains-tax/rates
Inheritance Tax: gov.uk/inheritance-tax
SDLT (England and Northern Ireland): gov.uk/stamp-duty-land-tax
LBTT (Scotland): revenue.scot/taxes/land-buildings-transaction-tax
LTT (Wales): gov.wales/land-transaction-tax-guide
VAT: gov.uk/vat-rates
Pension allowances: gov.uk/rates-and-allowances-pension-schemes
ISAs: gov.uk/rates-and-allowances-isa
Child Benefit, HICBC, Tax-Free Childcare: gov.uk/child-benefit-tax-charge
State Pension: gov.uk/new-state-pension
Apprenticeship Levy: gov.uk/guidance/pay-apprenticeship-levy
CIS: gov.uk/what-is-the-construction-industry-scheme
MTD for ITSA: gov.uk/making-tax-digital