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.
This is monies received in relation to your work and can be received from employment, directorship or self employment.
In some cases, individuals have a choice as to how their tax affairs are arranged. In these situations, an election must be made before the change can be applied.
There are many such elections, each with its own rules, and usually strict time limits.
'Emoluments' include all salaries, fees, wages, perquisites, including benefits in kind and profits whatsoever.
An employee is an individual who works under the control of and as part of the business of another, engaged under a contract which is a 'contract of service'.
H M Revenue & Customs can make enquiries into your self assessment tax return for a period of up to 12 months from the date they receive the return. However, if the return is filed late or amended this period is extended to the quarter date following the 12 month anniversary of the date they received the late return or amendment.
Quarter Dates: 31 Jan, 30 April, 31 July or 31 Oct.
The enquiry can be to clarify any entry made on the return. If you are at all unsure, you should seek further professional advice.
This scheme was introduced to encourage individuals to invest in small higher risk trading companies. The scheme provides income tax relief to external investors in qualifying unquoted companies, and capital gains tax exemption on disposal of shares.
Small Higher risk companies may offer their employees enterprise management share options, subject to a limit. Providing scheme rules are complied with, there will normally be no income tax or employers and employees NIC to pay and when an employee sells shares acquired under the scheme, Capital Gains Tax taper relief will date from the time the option was granted rather than the date it was exercised. There is no requirement for the scheme to be registered, but notice must be given when options are granted.
Certain areas in which the Government particularly wants to encourage investment have been designated as enterprise zones.
Those who set up business within an enterprise zone get certain advantages for a limited number of years, such as not paying business rates and entitlement to 100% relief for expenditure on new buildings for use in the trade. This relief was withdrawn from April 2011
Business entertainment means the provision of free or subsidised hospitality or entertainment. The person being entertained may be a customer, a potential customer or any other person.
Rules specify whether the amount is shown in the company accounts or on an employee's P11D as a taxable amount.
This relief may be due on gains made by individuals on the disposal of:
All or part of a trading business they carry on alone or in partnership;Assets of the individuals or partnerships trading business after it ceases;Shares in (and securites of) their personal trading company (or holding company of a trading group);Assets owned by them and used by their personal trading company (or group) or partnership
The relief is given as follows:
For gains arising from disposals made between 6 April 2008 and 5 April 2010 the first £1 million of gains qualifying for relief will be taxed at 10%.
For gains arising from disposals made between 6 April 2010 and 22 June 2010 the first £2 million of gains qualifying for relief will be taxed at 10%.
For gains arising from disposals made between 23 June 2010 and 5th April the first £5 million of gains qualifying for relief will be taxed at 10%.
For gains arising from disposals made on or after 6 April 2011 the first £10 million of gains qualifying for relief will be taxed at 10%
The limits shown are the lifetime allowance and claims can be made on more than one occasion up to the lifetime limit. Therefore, if qualifying gains of £2.5 million were made in May 2010 and then a further £2.5 million in July 2010, the May disposal would only qualify for £2 million to be charged at the 10% rate with the other £500,000 charged at 18%, but the July disposal would qualify fully for the £2.5 million as the lifetime limit at the time of disposal was £5 million and the limit has therefore not been breached.
This was a claim allowing individuals the chance to make amendments to self assessment tax returns for earlier years. However, this has been replaced by Overpayment Relief as from 1 April 2010.
`Estate` is a person's total possessions. It includes goods, money and property of every kind. In particular, `estate` refers to the possessions that a deceased person leaves.
The term 'ex-gratia' is used in relation to a payment the employer makes to an employee when under no legal or contractual obligation to do so.
Some types of income are exempt from UK tax. Examples include income from an ISA, premium bond prizes, some social security benefits, damages for personal injury.
Expenses must be wholly, exclusively and necessarily incurred in the performance of the duties of your employment, to qualify for tax relief.
