Tax Glossary
Welcome to the our Tax Glossary. To help you interpret the jargon that you can come across in dealing with your tax, our team of experts have written a brief explanation for hundreds of technical terms. Click on a letter to show entries.
De Minimis
Meaning a lower limit before something takes effect.
For example, a de minimis of £5000 applies to certain low interest loans made by employers. If the total of these loans to an individual is below this de minimis limit, there is no taxable benefit.
Meaning a lower limit before something takes effect.
For example, a de minimis of £5000 applies to certain low interest loans made by employers. If the total of these loans to an individual is below this de minimis limit, there is no taxable benefit.
Debt Collection
If you employ a debt collector to chase up money that is owed to you, your accountant may set the costs against your income when arriving at your profit.
If you employ a debt collector to chase up money that is owed to you, your accountant may set the costs against your income when arriving at your profit.
Debtors
People who owe you money are termed "debtors". When accounts are prepared, even if payments are oustanding from debtors, the details will still be shown. (see Debt Collection, Bad Debts.)
People who owe you money are termed "debtors". When accounts are prepared, even if payments are oustanding from debtors, the details will still be shown. (see Debt Collection, Bad Debts.)
Deductions - Calculations
Deductions are items that reduce your total income and therefore reduce your overall tax liability.
For example, self employed business profits are calculated from turnover minus deductions for business expenses.
Deductions are items that reduce your total income and therefore reduce your overall tax liability.
For example, self employed business profits are calculated from turnover minus deductions for business expenses.
Deductions - Tax Code
A tax code is made up of allowances and deductions.
Deductions are typically items where tax is payable but it is not possible to deduct it other than through your pay or pension via the tax code. For example, taxable company benefits, or State Pension.
A tax code is calculated by adding together allowances, then taking away the deductions. This gives net allowances, which are converted into the tax code.
A tax code is made up of allowances and deductions.
Deductions are typically items where tax is payable but it is not possible to deduct it other than through your pay or pension via the tax code. For example, taxable company benefits, or State Pension.
A tax code is calculated by adding together allowances, then taking away the deductions. This gives net allowances, which are converted into the tax code.
Deferment - National Insurance
Employee National Insurance payments are due at different rates depending upon your earnings. If you have more than one employment and you expect to earn at least the upper earnings limit for the year of £817pw from April 2011 in any one employment, or £956pw from April 2012 in a combination of employments, you can ask to defer payment of some of your contributions. H M Revenue & Customs Deferment Services will decide with which employers deferment can be given.
Deficiency Relief - Life Insurance policies
During the term of a Life Insurance Policy, it is possible to receive taxable income from it.
Any payout on termination of the policy should be more than paid in. If this amount is less than the amounts on which tax has already been paid, it follows that too much tax was paid. (ie tax has been paid on more income than has been received.) Corresponding deficiency relief can be claimed in these cases.
During the term of a Life Insurance Policy, it is possible to receive taxable income from it.
Any payout on termination of the policy should be more than paid in. If this amount is less than the amounts on which tax has already been paid, it follows that too much tax was paid. (ie tax has been paid on more income than has been received.) Corresponding deficiency relief can be claimed in these cases.
Department for work and pensions
This is a Government department dealing with state benefits and pensions.
Depreciation
An asset used in a business on an ongoing basis retains a residual value. However, this value will reduce over the lifespan of the asset. This reduction in value is the depreciation and can be claimed as a deduction from business profits.
Depreciation is claimed in accounts as Capital Allowances.
An asset used in a business on an ongoing basis retains a residual value. However, this value will reduce over the lifespan of the asset. This reduction in value is the depreciation and can be claimed as a deduction from business profits.
Depreciation is claimed in accounts as Capital Allowances.
Director
For tax purposes, directors` income is treated in the same way as other employees, although there are differences in the way National Insurance and company benefits are dealt with.
For tax purposes, directors` income is treated in the same way as other employees, although there are differences in the way National Insurance and company benefits are dealt with.
Directors' Fees
Any fees paid over and above normal income to a director should be treated in the same way as other income
Any fees paid over and above normal income to a director should be treated in the same way as other income
Disallowable Expenses
The accounts of a business come in two forms - business accounts and accounts for tax purposes.
In the former, all income and expenses will be shown, to reflect the exact financial situation. These accounts are prepared first and then used as the basis of the calculation of your profits for tax purposes.
In the latter, some expenses will then be disallowed as they do not qualify for tax relief. When the tax accounts are prepared, these disallowable expenses are added back on to net profits to find the net taxable profits.
The accounts of a business come in two forms - business accounts and accounts for tax purposes.
In the former, all income and expenses will be shown, to reflect the exact financial situation. These accounts are prepared first and then used as the basis of the calculation of your profits for tax purposes.
In the latter, some expenses will then be disallowed as they do not qualify for tax relief. When the tax accounts are prepared, these disallowable expenses are added back on to net profits to find the net taxable profits.
Discounted Securities
Special rules apply to all securities issued at a discount to private investors. Securities are discounted where their issue price is lower than the redemption price.
The discount is limited to 15% of the redemption value, or 0.5% per year held whichever is lower.
There is no capital gains tax charge but instead a charge to income tax arises in the tax year of disposal or redemption on the profit made.
Special rules apply to all securities issued at a discount to private investors. Securities are discounted where their issue price is lower than the redemption price.
The discount is limited to 15% of the redemption value, or 0.5% per year held whichever is lower.
There is no capital gains tax charge but instead a charge to income tax arises in the tax year of disposal or redemption on the profit made.
Discretionary Trusts
A Trust where the Trustees have discretionary power over the distribution of income and assets and no-one has a specific right to them.
A Trust where the Trustees have discretionary power over the distribution of income and assets and no-one has a specific right to them.
Dispensation
All payments to employees are taxable - including business expenses. Strictly an employer should advise H M Revenue & Customs, followed by a separate claim by the individual for tax relief. A dispensation removes the requirement to do this.
An employer reaches an agreement with the Tax Office that only valid business expenses will will be reimbursed to the employee and no report or claim is necessary.
All payments to employees are taxable - including business expenses. Strictly an employer should advise H M Revenue & Customs, followed by a separate claim by the individual for tax relief. A dispensation removes the requirement to do this.
An employer reaches an agreement with the Tax Office that only valid business expenses will will be reimbursed to the employee and no report or claim is necessary.
Disposals
This refers to the sale, loss, gift, theft or swap of an asset.
This refers to the sale, loss, gift, theft or swap of an asset.
Distribution/Dividend
This is a term used for the money paid out on investments such as shares, unit trusts etc.
A notional tax credit of 10% is shown as deducted on the voucher, which is not refundable. However, if you are liable to tax at the higher rate an additional charge of 22.5% of the gross dividend is due or if you are liable to tax at the additional rate an additional change of 32.5% of the gross dividend is due.
Dividends - Stock or Scrip Dividends
Where shares are offered as an alternative to a cash dividend, it is known as a stock or scrip dividend.
Where shares are offered as an alternative to a cash dividend, it is known as a stock or scrip dividend.
Domicile
Broadly speaking you are domiciled in the country considered to be your permanent home. It is distinct from nationality or residence and you can only have one domicile at any given time.
Domicile of Origin - inherited from father
Domicile of choice - can change domicile of origin by behaviour
Factors for deciding domicile of choice are, burial arrangements, location of assets, membership of clubs, visits or links with a country
Domicile of Dependency - follows that of the person on whom you are legally dependent.
Broadly speaking you are domiciled in the country considered to be your permanent home. It is distinct from nationality or residence and you can only have one domicile at any given time.
Domicile of Origin - inherited from father
Domicile of choice - can change domicile of origin by behaviour
Factors for deciding domicile of choice are, burial arrangements, location of assets, membership of clubs, visits or links with a country
Domicile of Dependency - follows that of the person on whom you are legally dependent.
Double Taxation
Where the same income is liable to be taxed in both the UK and another country, relief may be available under the specific terms of a double tax agreement between the UK and that other country. This ensures the income is only taxed once.
Where the same income is liable to be taxed in both the UK and another country, relief may be available under the specific terms of a double tax agreement between the UK and that other country. This ensures the income is only taxed once.
Dual Resident
It is possible to be resident in more than one country at a time for tax purposes. The term for this is dual residence. This does not necessarily mean that tax is paid twice as Double Taxation rules may apply.
It is possible to be resident in more than one country at a time for tax purposes. The term for this is dual residence. This does not necessarily mean that tax is paid twice as Double Taxation rules may apply.
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