The tax glossary

A US rule letting real-estate investors defer capital gains tax by reinvesting sale proceeds into a similar "like-kind" property. The tax is postponed, not erased, until a later non-exchanged sale.

A family of US forms reporting income paid to someone who isn't an employee — such as freelance work (1099-NEC), interest, or dividends. The IRS gets a copy, so this income must appear on your return.

The specific US form reporting payments of 600 dollars or more to a non-employee, such as a freelancer or contractor. The recipient reports this income on Schedule C.

A US workplace retirement plan that lets employees save part of their pay before tax, often with an employer match. The money grows tax-deferred until withdrawal in retirement.

A retirement savings plan like a 401(k) but for employees of schools, churches, and certain non-profits. Contributions are pre-tax and grow tax-deferred.

The Inheritance Tax rule that gifts you make are tax-free if you live for seven years after giving them. Die within seven years and the gift may be taxed on a sliding scale.

The span of time a set of accounts or a Corporation Tax return covers, usually 12 months. It can't be longer than 12 months for tax, so a long period gets split into two returns.

Costs a business has run up but not yet been billed for at the year-end, like unbilled fees or pending utility charges. They're added so the accounts show all costs of the period.

The top 45% income-tax band on income above 125,140 pounds. Additional-rate taxpayers get no Personal Savings Allowance and no Personal Allowance.

Your total taxable income after certain deductions like pension contributions and Gift Aid. HMRC uses it to decide whether you lose your Personal Allowance or owe the High Income Child Benefit Charge.

The general running costs of a business that aren't direct cost of sales — rent, utilities, software, professional fees, salaries, and marketing. They're deducted to arrive at operating profit.

Adjusted Gross Income, your total US income minus certain "above-the-line" deductions like retirement and HSA contributions. It's a key figure that drives many other tax calculations.

A UK tax on flights leaving UK airports, charged per passenger and varying by distance and cabin class. Airlines build it into ticket prices.

The costs you can subtract from sale proceeds when working out a capital gain — the original purchase price, buying/selling fees, and money spent improving the asset. They reduce the taxable gain.

Costs incurred "wholly and exclusively" for your business that you can deduct from income to reduce taxable profit, like materials, business travel, and professional fees. Personal costs don't qualify.

The intangible-asset version of depreciation — spreading the cost of things like goodwill or patents over their useful life. It gradually writes down the asset's value in the accounts.

The Alternative Minimum Tax, a parallel US tax calculation that limits certain breaks to ensure higher earners pay a minimum amount. You pay whichever is higher — regular tax or the AMT.

Shorthand for Adjusted Net Income — your income figure after pension and Gift Aid deductions used to test certain tax thresholds. Keeping it below key limits can save a lot of tax.

The maximum you can pay into pensions each year with tax relief (60,000 pounds for most people). Contributions above it can trigger a tax charge, though unused allowance can be carried forward up to three years.

The amount of capital gains you can make each tax year before any Capital Gains Tax is due (3,000 pounds from 2024/25). Gains within this allowance are completely tax-free.

A capital allowance letting a business deduct 100% of the cost of most equipment (up to 1 million pounds a year) from its taxable profit straight away. It gives immediate tax relief on big purchases.

Accounting Reference Date, the date a company's financial year ends, used to set deadlines for filing accounts. By default it's the anniversary of the month the company was set up.

Other companies controlled by the same people as yours. They share (divide) the Corporation Tax thresholds, so having several connected companies can push each into a higher rate sooner.

Annual Tax on Enveloped Dwellings, a yearly charge on UK homes worth over 500,000 pounds that are owned through a company rather than by an individual. It discourages holding high-value homes in corporate "envelopes".

The law requiring employers to automatically put eligible staff into a workplace pension and contribute toward it. You can opt out, but doing so means losing the employer's "free" contribution.

A snapshot of what a business owns (assets) and owes (liabilities) at a single date, with the difference being its net worth. It must "balance" — assets minus liabilities equals shareholders' funds.

The final top-up payment that settles your Self Assessment bill after any payments on account, due by 31 January. It covers the difference between what you've prepaid and what you actually owe.

The 20% band of UK income tax that applies to most people's earnings above the Personal Allowance up to about 50,270 pounds. It's the standard rate the majority of taxpayers pay.

Perks your employer gives you on top of salary that aren't cash — like a company car, private medical insurance, or accommodation. They're taxable, with the value reported on a P11D.

Short for Benefits in Kind, the taxable non-cash perks from an employer. The taxable value is added to your income, and for company cars it depends on the car's price and emissions.

An extra slice of tax-free income added to the Personal Allowance for people registered as severely sight-impaired. It reduces the amount of income tax they pay.

A tax on most non-residential properties like shops, offices, and warehouses, based on the property's estimated rental value. It's the business equivalent of Council Tax.

A C-corporation, the standard US company taxed in its own right on its profits, with shareholders taxed again on dividends ("double taxation"). It contrasts with the pass-through S-corp.

The total face (nominal) value of shares a company has issued and asked shareholders to pay for. For example, 100 shares of 1 pound each gives 100 pounds of called-up share capital.

Tax relief that lets a business deduct the cost of equipment, machinery, and vehicles from its taxable profits. They're the tax system's version of depreciation, which isn't itself tax-deductible.

Tax on the profit you make when you sell or give away something that's gone up in value, such as shares, a second home, or crypto. You only pay on the gain above your yearly tax-free allowance.

Losses made when you sell an asset for less than it cost. You can set them against capital gains in the same year or carry them forward to reduce future gains and your tax bill.

Short for Capital Gains Tax — the tax on profits from selling assets that have risen in value. Different rates apply to residential property versus other assets, and to basic- versus higher-rate taxpayers.

A taxable profit arising from a life insurance policy or investment bond, for example when you cash it in. The gain is reported on your tax return and may qualify for top-slicing relief.

The profits a company makes when it sells assets like property or investments, which are added to its taxable profits. Unlike individuals, companies get no annual tax-free allowance on these gains.

A regular UK government payment to people responsible for a child, paid every four weeks. Higher earners may have to pay some or all of it back through the High Income Child Benefit Charge.

A US tax credit (up to a set amount per qualifying child) that directly reduces the federal tax a family owes, and may be partly refundable. It phases out for higher-income households.

The Construction Industry Scheme, under which contractors deduct tax from subcontractors' pay and send it to HMRC. Subcontractors then claim credit for these deductions on their tax return.

National Insurance the self-employed pay as a percentage of their annual profits above a threshold. It's collected through the Self Assessment tax return alongside income tax.

A company controlled by five or fewer people (or by its directors), which describes most small private companies. Special tax rules apply, such as the charge on loans to owners.

The UK government register of companies, where every limited company must file annual accounts and confirmation statements. It's separate from HMRC, which handles the tax side.

A vehicle your employer provides that you can use privately, treated as a taxable benefit in kind. The tax depends on the car's list price and CO2 emissions, with low rates for electric cars.

The US federal tax on a company's profits, paid mainly by C-corporations at a flat rate. S-corporations and many LLCs instead pass profits through to owners' personal returns.

The tax a UK limited company pays on its profits. Companies work out their own bill and file a CT600 return with HMRC each year.

The direct costs of producing the goods or services you sold — raw materials, stock bought for resale, and labour tied to specific jobs. Subtracting it from turnover gives gross profit.

An annual local-government tax on homes in England, Scotland, and Wales, based on the property's value band and the local council's rates. It pays for local services like rubbish collection and policing.

Money the business owes to others at the year-end, such as unpaid supplier bills, tax due, and loans. Also called payables, split between amounts due within and after one year.

Company Registration Number, the unique 8-character ID Companies House gives a UK company when it's incorporated. It identifies the company on all official filings.

Describing a tax situation that spans two countries, such as someone earning or living in both the UK and US. It involves combining each system, applying treaties, and converting currencies.

The welcome letter HMRC sends a new company after it's set up, containing its Corporation Tax reference and key dates. It's how a company first learns its Corporation Tax UTR.

The official Corporation Tax return form a UK company files with HMRC to declare its profits and tax due. It has numbered boxes and various supplementary pages for things like loans and R&D.

A supplementary page of the Corporation Tax return for "loans to participators" — money the company lends to its owners/directors. Such loans can trigger an extra tax charge under section 455.

A supplementary Corporation Tax page used to claim or surrender "group relief", where losses are shared between companies in the same group. It lets a profitable company use a sister company's losses.

A supplementary Corporation Tax page for claiming R&D tax credits, including the RDEC above-the-line credit. It sets out the step-by-step calculation HMRC requires.

Short for the Child Tax Credit, which lowers a US family's federal tax bill for each qualifying child under 17. Part of it can be refunded even if you owe no tax.

Short-term things a business owns that it expects to turn into cash within a year — stock, money owed by customers, and cash in the bank. They fund day-to-day operations.

Money owed to the business at the year-end, mainly from customers who haven't yet paid their invoices. Also called receivables, they're counted as a current asset.

An accounting estimate of tax that will become payable (or recoverable) in future because of timing differences between the accounts and the tax rules. It's shown as a provision on the balance sheet.

People you financially support — usually children or relatives — whom you claim on your US tax return to unlock credits and deductions. Each qualifying dependent can reduce your tax.

Spreading the cost of a physical asset over its useful life, charging a bit each year to reflect wear and tear. It reduces the asset's book value on the balance sheet over time.

The tax term for selling, gifting, swapping, or otherwise getting rid of an asset, which can trigger Capital Gains Tax. Even giving something away counts as a disposal at its market value.

The amount of dividend income you can receive each year tax-free (500 pounds from 2024/25). Dividends above it are taxed at special dividend rates depending on your income band.

Tax on income you receive from owning shares (dividends), charged at lower rates than salary. You get a small tax-free dividend allowance first, then pay according to your income band.

Relief that stops the same income being fully taxed in two countries, by crediting foreign tax paid against the UK (or US) bill. It's often governed by tax treaties between countries.

The real percentage of tax you lose on extra income once hidden effects (like losing allowances or benefits) are counted. Quirks like the Personal Allowance taper can push it as high as 60%.

The Enterprise Investment Scheme, which gives 30% income-tax relief for investing in shares of qualifying higher-risk small companies. It rewards investors for backing young businesses.

Enterprise Management Incentives, a tax-advantaged share-option scheme for smaller companies to reward key staff. Employees can buy shares later at a set price with little or no income tax on the gain.

A US federal tax on the transfer of a deceased person's estate above a very high exemption (over 13 million dollars). Because the exemption is so large, only a small number of estates actually pay it.

A tax on specific goods like alcohol, tobacco, and fuel, usually built into the price you pay. It's charged on quantity (per litre or unit) rather than as a percentage of value.

The Foreign Account Tax Compliance Act, a US law making foreign banks report accounts held by Americans, so offshore income can't be hidden. It's a key concern for US citizens living abroad.

The Foreign Bank Account Report, a US filing required when an American holds more than 10,000 dollars across foreign accounts. It's about disclosure, not tax, but penalties for missing it are steep.

The main US tax on individuals' income, collected by the IRS using progressive brackets so higher income is taxed at higher rates. It's reported each year on Form 1040.

The Federal Insurance Contributions Act tax, US payroll tax split between employee and employer that funds Social Security and Medicare. It's the rough American equivalent of UK National Insurance.

The Foreign Income and Gains regime (from 2025/26) giving new UK arrivals up to four years of UK-tax-free treatment on their foreign income and gains. It replaced the old "non-dom" remittance basis.

The category you choose on a US tax return — single, married filing jointly, married filing separately, or head of household. It determines your tax brackets, standard deduction, and many credits.

Long-term things a business owns and uses to operate, like property, equipment, vehicles, and long-term investments. They're shown on the balance sheet at cost less depreciation.

Income earned outside your home country, such as overseas dividends, rent, or wages. It's often taxable at home, with relief available for tax already paid abroad.

Relief that lets you offset tax already paid abroad against your UK tax on the same income, so you aren't taxed twice. It's claimed on the foreign-income pages of the tax return.

The standard US individual income tax return filed with the IRS each year to report income and calculate federal tax owed or refunded. It's the American equivalent of the UK Self Assessment return.

The IRS form and vouchers used to pay quarterly estimated taxes on income that isn't subject to withholding, like self-employment or investment income. Paying on time avoids an underpayment penalty.

The IRS form a US company files to elect S-corporation tax status, so its profits pass through to owners. It's often used by profitable sole proprietors to cut self-employment tax.

The main UK accounting standard for small and medium companies, more detailed than FRS 105. Section 1A is a reduced-disclosure version for small companies.

The simplified UK accounting standard for "micro-entities" — the smallest companies. It allows very short, basic accounts with minimal disclosure.

Short for Foreign Tax Credit Relief — a credit for overseas tax paid, set against your UK tax bill on that foreign income. It prevents the same income being taxed fully in two countries.

A Corporation Tax relief letting companies deduct 100% of the cost of new qualifying plant and machinery in the year of purchase, with no annual cap. It applies mainly to "main-pool" assets.

A scheme letting UK charities reclaim 25% basic-rate tax on your donations, and letting higher-rate donors claim extra relief. Every 80 pounds you give becomes 100 pounds for the charity.

The extra amount paid to buy a business above the value of its identifiable assets, reflecting things like reputation and customer base. It only appears when goodwill has actually been purchased.

HMRC's older XML-based system for submitting returns electronically (separate from the newer Making Tax Digital APIs). Returns are wrapped in a GovTalk "envelope" and stamped with an IRmark.

Your total pay before any deductions like tax, National Insurance, or pension. It's the headline salary figure, as opposed to take-home (net) pay.

What's left after taking the direct cost of sales away from turnover. It shows the margin earned on sales before paying overheads like rent and admin.

A rule letting companies in the same group transfer losses between each other to cut the group's overall Corporation Tax. A loss-making company can hand its losses to a profitable sister company.

A US filing status for unmarried people who pay over half the cost of a home for a qualifying dependent. It gives more favorable brackets and a larger standard deduction than filing single.

The High Income Child Benefit Charge, a tax that claws back Child Benefit when the higher earner in a household has an income over 60,000 pounds. It's fully clawed back once income reaches 80,000 pounds.

The 40% income-tax band that applies to income above roughly 50,270 pounds (up to 125,140). Higher-rate taxpayers get extra pension and Gift Aid relief but smaller savings and dividend allowances.

His Majesty's Revenue and Customs, the UK government department that collects taxes and pays out some benefits. It runs the systems you use to file tax returns, pay tax, and claim refunds.

A Health Savings Account, a US account paired with a high-deductible health plan offering a "triple tax advantage" — tax-deductible deposits, tax-free growth, and tax-free withdrawals for medical costs. Unused funds roll over and can act as extra retirement savings.

Short for Inheritance Tax, charged on the part of an estate above the available allowances when someone dies. Careful planning with gifts, the spouse exemption, and reliefs can reduce or remove it.

A tax on certain goods brought into the UK from abroad, based on the type and value of the goods. It's collected at the border and can add to the cost of imported items.

The main tax you pay on your earnings, calculated in bands so higher slices of income are taxed at higher rates. In the UK it funds general government spending; the US has a similar federal system plus most states.

A 40% tax on the value of someone's estate (money, property, possessions) above a tax-free threshold when they die. Gifts made within seven years of death can also be caught.

The VAT a business pays on its own purchases and expenses, which it can usually reclaim from HMRC. It's offset against the VAT the business charges customers.

Valuable things a business owns that you can't physically touch, such as goodwill, patents, trademarks, and capitalised software. They appear on the balance sheet at their written-down value.

The "off-payroll working" rules that test whether a contractor working through their own company is really a disguised employee. If caught "inside IR35", they're taxed much like an employee.

An Individual Retirement Account, a US personal pension you set up yourself to save for retirement with tax advantages. Traditional IRAs give an upfront deduction; Roth IRAs give tax-free withdrawals later.

A digital fingerprint (hash) generated from a tax return's data when it's submitted to HMRC, proving the exact content was received unaltered. It acts like a receipt confirming what you filed.

The Internal Revenue Service, the US federal agency that collects taxes and enforces tax law. It is the American equivalent of the UK's HMRC.

An Individual Savings Account, a UK "wrapper" that shelters savings and investments from tax on interest, dividends, and capital gains. You can put in up to 20,000 pounds each tax year.

Specific expenses (like mortgage interest, state taxes, and charitable gifts) that US taxpayers can add up and deduct instead of the standard deduction. You itemize only when it beats the standard deduction.

Income Tax Self Assessment, the part of Making Tax Digital that applies to sole traders and landlords, requiring quarterly digital income reporting. Also a general term for the income-tax side of Self Assessment.

Inline eXtensible Business Reporting Language, the computer-readable format companies must use to file accounts and tax computations with HMRC and Companies House. It tags each figure so software can read it automatically.

A Junior ISA, a tax-free savings or investment account for children under 18 with its own lower annual limit. The money is locked until the child turns 18, then becomes theirs.

A US tax form (Schedule K-1) that reports your share of income, deductions, and credits from a partnership, S-corp, or LLC you're part of. You use it to put those amounts on your personal return.

Land and Buildings Transaction Tax, Scotland's version of Stamp Duty paid when buying property there. It has its own bands and rates set by the Scottish Government.

A Lifetime ISA, a tax-free account for people aged 18 to 39 saving for a first home or retirement, where the government adds a 25% bonus. There are penalties for withdrawing for other reasons.

A Limited Liability Company, a flexible US business structure that protects owners' personal assets and is usually taxed as a pass-through (like a sole proprietor or partnership). It can also elect to be taxed as an S-corp.

Money a close company lends to its owners or directors. If not repaid within nine months of the year-end, the company faces an extra tax charge (section 455) until the loan is repaid.

Profit on US assets held longer than one year, taxed at preferential rates (0%, 15%, or 20%) that are lower than rates on ordinary income. The favorable rate rewards longer-term investing.

Land Transaction Tax, the Welsh equivalent of Stamp Duty paid when you buy property in Wales. It's set by the Welsh Government with its own thresholds and rates.

Modified Adjusted Gross Income, a tweaked version of your income figure the IRS uses to test eligibility for things like IRA deductions, credits, and the NIIT. Various add-backs make it slightly higher than ordinary AGI.

The 25% headline Corporation Tax rate that applies to companies with profits over 250,000 pounds. Companies below that may pay less through the small-profits rate or marginal relief.

The tax rate you pay on your next pound or dollar of income — your top band, not your average rate. It's the number that matters when deciding whether extra pension or deductions are worthwhile.

A reduction in Corporation Tax for companies with profits between 50,000 and 250,000 pounds, easing them gradually from the 19% small-profits rate up to the 25% main rate. It avoids a sudden jump in tax.

A UK tax break letting a lower-earning spouse or civil partner transfer 1,260 pounds of their Personal Allowance to a basic-rate-paying partner. It can save the couple up to 252 pounds a year in income tax.

A US tax filing status where a married couple combine their income on one return, usually getting wider brackets and a bigger standard deduction. It often lowers a couple's total tax.

The US federal health-insurance program for people 65 and older (and some younger), partly funded by FICA payroll taxes. Higher earners pay an extra Medicare surtax.

Making Tax Digital, HMRC's programme requiring businesses and landlords to keep digital records and send quarterly updates using compatible software. It's gradually replacing the once-a-year paper-style return.

A separate tax on earnings (on top of income tax) that pays toward the State Pension and certain benefits. Employees pay Class 1, the self-employed pay Class 2 and Class 4.

What a business is worth on paper — total assets minus all liabilities. On the balance sheet it should match shareholders' funds, confirming the accounts balance.

Current assets minus the debts due within a year, showing the business's short-term financial cushion (working capital). A positive figure means it can cover near-term bills.

A workplace pension method where contributions come out of your salary before income tax is calculated, so you get full tax relief immediately. It differs from relief at source, where relief is added afterward.

National Insurance Contributions, the payments individuals and employers make under the National Insurance system. The amount depends on how much you earn and whether you're employed or self-employed.

The Net Investment Income Tax, an extra 3.8% US tax on investment income (interest, dividends, capital gains) for higher earners above certain income thresholds. It's on top of regular income and capital gains tax.

The slice of an estate (325,000 pounds) that's free of Inheritance Tax. Anything above it (after other reliefs) is generally taxed at 40%.

National Insurance number, your personal ID for the UK social-security and tax system (format like AB123456C). It tracks the National Insurance you pay toward your State Pension and benefits.

Short for non-domiciled, historically someone living in the UK whose permanent home (domicile) is abroad, who could limit UK tax on foreign income. The old non-dom regime was replaced by the FIG rules from April 2025.

A company's interest income or expense that isn't part of its main trade, such as bank interest received or paid on investments. Net amounts feed into the Corporation Tax calculation.

The Nil-Rate Band — the 325,000-pound Inheritance Tax-free allowance every estate gets. Unused band can often be passed to a surviving spouse, effectively doubling it.

Short for Non-Trading Loan Relationship — the rules covering interest a company earns or pays outside its trade. A net interest income goes in CT600 box 170; a net deficit can reduce other profits.

The Credit for Other Dependents, a smaller US tax credit for dependents who don't qualify for the Child Tax Credit, such as older children or elderly relatives. It reduces the federal tax owed.

Profit from a business's core activities, after all operating costs but before interest and tax. Sometimes called PBIT (profit before interest and tax).

US dividends that don't qualify for the preferential rate and are taxed at your normal income tax rates. They're less tax-favored than qualified dividends.

The VAT a business charges its customers on sales and must pay over to HMRC. The business pays HMRC the output VAT it collected minus the input VAT it can reclaim.

A form employers send HMRC listing the taxable benefits in kind given to each employee, such as a company car or medical insurance. It's how the value of these perks gets taxed.

The form you get when you leave a job, showing your pay and tax so far that year. You give it to your next employer so they tax you correctly.

An end-of-year summary from your employer showing your total pay and the tax and National Insurance deducted over the tax year. You need it to check your tax and complete a tax return.

The gradual loss of your Personal Allowance once your income tops 100,000 pounds — you lose 1 pound of allowance for every 2 pounds over. This creates an effective 60% tax rate on income between 100,000 and about 125,140 pounds.

A business whose profits flow straight to the owners' personal tax returns instead of being taxed at the company level. Sole proprietors, partnerships, S-corps, and most LLCs are pass-throughs.

Pay As You Earn, the system where your employer takes income tax and National Insurance out of your wages before paying you, and sends it to HMRC. Most employees never have to file a tax return because of this.

Advance instalments toward next year's Self Assessment tax bill, due in January and July, each roughly half your previous bill. They apply when your tax owed is over 1,000 pounds.

Tax relief that effectively gives you your income tax back on money you put into a pension, making contributions cheaper. Basic-rate relief is added automatically; higher-rate taxpayers claim more through their tax return.

The amount of income you can earn each year before paying any income tax (around 12,570 pounds). It shrinks once your income passes 100,000 pounds and disappears entirely at higher incomes.

The amount of bank or building-society interest you can earn each year tax-free — 1,000 pounds for basic-rate taxpayers, 500 for higher-rate, and nil for additional-rate. Interest above it is taxed at your normal rate.

A separate UK student loan for master's or doctoral study, repaid alongside any undergraduate plan at its own rate and threshold. You can be repaying it and an undergraduate plan at the same time.

Expenses paid in advance that cover a future period, such as insurance paid for the year ahead. The portion relating to next year is carried forward as an asset, not this year's cost.

A company's total profit after all expenses and interest but before the tax charge is taken off. It's the starting point for working out Corporation Tax.

A US state or local tax charged when property changes hands, similar in idea to UK Stamp Duty. Rates and rules vary widely by state and county.

Amounts set aside in the accounts for likely future costs whose exact size or timing isn't yet known, such as warranty claims or deferred tax. They recognise a liability before it's finally settled.

Short for the Personal Savings Allowance, your yearly tax-free band for savings interest. The higher your income tax band, the smaller this allowance becomes.

Person with Significant Control, anyone who effectively owns or controls a UK company (usually holding over 25% of shares or votes). Companies must record their PSCs on a public register.

The Qualified Business Income deduction, letting many US self-employed people and pass-through owners deduct up to 20% of their business profit. It reduces the income tax on that profit.

US dividends that meet IRS rules and so get taxed at the lower long-term capital gains rates instead of ordinary income rates. They're more tax-efficient than "ordinary" dividends.

Cash gifts a company makes to UK charities that reduce its taxable profit pound-for-pound. They're the company equivalent of an individual's Gift Aid.

A defined slice of your pay (between a lower and upper limit) used to calculate minimum auto-enrolment pension contributions. Earnings outside that band don't count toward the minimum.

Interest on a loan used for specific approved purposes — like buying into a partnership or shares in a close company you work for — that you can deduct from your income. It's a "tax reducer" claimed on the SA101.

Tax payments US self-employed people and investors make four times a year on income with no withholding. Skipping them can trigger an IRS underpayment penalty.

A Corporation Tax incentive rewarding companies that spend money on qualifying research and development by giving extra tax relief or a cash credit. It aims to encourage innovation.

The Research and Development Expenditure Credit, a taxable "above-the-line" credit (around 20% of qualifying R&D spend) under the merged R&D scheme. It gives an after-tax cash benefit of roughly 15%.

A pension setup where you pay in from your after-tax money and the provider claims 20% basic-rate tax relief from HMRC to top it up. Higher-rate taxpayers reclaim the rest via their tax return.

An old tax treatment letting non-doms pay UK tax on foreign income only when they brought it into the UK. It has been replaced for new arrivals by the four-year FIG regime.

An extra Inheritance Tax allowance (up to 175,000 pounds) when you leave your main home to children or grandchildren. It sits on top of the standard 325,000-pound nil-rate band.

Mortgage interest and similar costs on rented-out residential property. Since 2020 landlords can't deduct these from rental profit; instead they get a 20% basic-rate tax credit on the amount.

The running total of profits a company has kept rather than paid out as dividends. It grows with each year's profit and shrinks with losses or dividends.

Required Minimum Distributions, the amounts US law forces you to start withdrawing each year from traditional retirement accounts once you reach a set age. They ensure the deferred tax eventually gets paid.

Short for Residence Nil-Rate Band, the additional IHT-free amount for passing your home down to direct descendants. It tapers away for estates worth more than 2 million pounds.

An IRA funded with after-tax money, where qualified withdrawals in retirement are completely tax-free. It suits people who expect higher tax rates in the future.

An S-corporation, a US company whose profits "pass through" to owners' personal tax returns instead of being taxed at the company level. Owners can split pay between salary and distributions to save on self-employment tax.

The main UK Self Assessment tax return form for individuals, where you report income, gains, reliefs, and allowances. Extra pages (supplements) are added for specific income types.

The "additional information" supplement to the SA100, capturing less common items like life-insurance gains, EIS/SEIS/VCT investments, and certain reliefs. It's only filed when you have those entries.

The employment supplement to the SA100, used to report pay, tax deducted, benefits, and expenses from a job. You add one for each employment.

The UK property supplement to the SA100, used to report rental income and expenses from letting out property. It also handles the residential finance-cost tax credit.

The foreign income supplement to the SA100, used to report overseas income like foreign dividends and to claim relief for foreign tax paid.

The capital gains supplement to the SA100, where you report disposals of assets, gains, losses, and the tax due. It separates residential property gains from other assets.

The residence and domicile supplement to the SA100, used by people who are non-resident or have foreign-status claims. It captures days in the UK and treaty or remittance claims.

The tax-calculation summary of the Self Assessment return, showing how your final tax bill is worked out from all your income and reliefs. It's the bottom-line result of the SA100.

The Self Assessment tax return for business partnerships, reporting the partnership's income and how profits are split. Each partner then reports their share on their own SA100.

An arrangement where you give up part of your salary in exchange for a benefit like extra pension, cutting both your income tax and National Insurance. It's a tax-efficient way to boost pension savings.

A US state and local tax added at the checkout on goods and some services, varying by state and city. Unlike UK VAT it's only charged at the final sale, not at each stage of production.

The State And Local Tax deduction, letting US itemizers deduct state and local income or property taxes from federal taxable income, capped at a set amount. The cap mainly affects people in high-tax states.

Money your savings earn from banks, building societies, or similar. It's taxable income, but the Personal Savings Allowance and ISAs can keep much of it tax-free.

Save As You Earn (Sharesave), a tax-advantaged scheme where you save a fixed monthly amount for 3 to 5 years, then can buy company shares at a discounted price set at the start. If shares fall, you just take your savings back.

The US tax form for reporting interest and ordinary dividend income above a certain amount. It lists the payers and totals that feed into your Form 1040.

The US tax form sole proprietors and freelancers use to report business income and expenses on their personal return. The net profit flows into income tax and self-employment tax.

The US tax form for reporting capital gains and losses from selling investments and property. It's where short-term and long-term gains are totaled.

The US tax form for reporting income from rentals, royalties, and pass-through entities like partnerships and S-corps. Landlords report their rental profit or loss here.

A separate set of income-tax bands and rates set by the Scottish Parliament for people who live in Scotland. Scottish taxpayers have a tax code starting with "S" and pay slightly different rates from the rest of the UK.

Short for Stamp Duty Land Tax, charged on property purchases in England and Northern Ireland. First-time buyers get relief; buyers of additional properties pay a surcharge.

Self-employment tax, the 15.3% US tax self-employed people pay to cover Social Security and Medicare (both the employee and employer shares). It's the self-employed equivalent of FICA.

The HMRC method for valuing shares of the same type bought at different times — they're all averaged into one "pool" cost. This average cost is used to work out the gain when you sell some.

The Seed Enterprise Investment Scheme, offering 50% income-tax relief for investing in very early-stage startups. The higher relief reflects the greater risk of brand-new companies.

The HMRC system for telling them about income that isn't taxed automatically through your wages, such as self-employment, rental, or investment income. You file a yearly tax return online and pay any tax owed.

Working for yourself rather than as an employee — as a sole trader, freelancer, or contractor. You're responsible for reporting your own income and paying your own tax.

The extra paid for shares above their face value when a company issues them. If a 1-pound share is sold for 10 pounds, the 9-pound difference goes into the share premium account.

Employer programmes that let staff acquire company shares, often with tax advantages, to share in the business's success. Examples include SAYE, SIP, and EMI.

The owners' total stake in a company — share capital plus reserves and retained profits. It should equal the company's net assets and represents what would be left for owners after paying all debts.

Profit on US assets held for one year or less, taxed at your ordinary income tax rates rather than the lower long-term rates. Selling quickly costs you more in tax.

A Share Incentive Plan, letting employees buy company shares out of pre-tax pay, often with matching or free shares from the employer. Holding the shares long enough makes them free of income tax and National Insurance.

A Self-Invested Personal Pension, a do-it-yourself pension that lets you choose your own investments. Contributions get tax relief and grow tax-free until you draw them in retirement.

The lower 19% Corporation Tax rate for companies with profits up to 50,000 pounds. From April 2023 you must actively claim it on the CT600 rather than getting it automatically.

The version of R&D tax relief for small and medium enterprises, giving an enhanced extra deduction on qualifying R&D costs. The enhancement rate dropped from 130% to 86% for spending from April 2023.

The US federal program providing retirement, disability, and survivor benefits, funded by FICA payroll taxes. It's a partial counterpart to the UK State Pension.

The simplest way to run a business as an individual, where you and the business are legally the same. You keep the profits but are personally liable for debts and file Self Assessment.

The rule that anything you leave to a UK-domiciled husband, wife, or civil partner passes free of Inheritance Tax, with no limit. It also lets unused nil-rate band transfer to them.

Stamp Duty Land Tax, the tax you pay when buying a home or land in England and Northern Ireland above a price threshold. The rate rises in bands with the purchase price, with surcharges for second homes.

A fixed amount US taxpayers can subtract from income before tax, no questions asked, based on filing status. Most people take it instead of itemizing because it's simpler and often larger.

A tax on income charged by most US states on top of federal tax, with rates ranging from zero (e.g. Texas, Florida) to over 13% (e.g. California). Each state sets its own rules and brackets.

HMRC's set of rules for deciding whether you count as a UK tax resident in a given year, based on days spent in the UK and personal ties. Residence determines how much of your worldwide income is taxed here.

Goods a business holds to sell or use — raw materials, half-finished items, and finished products waiting to be sold. Also called inventory, valued at the lower of cost and sale value.

The category of UK student loan you have (Plan 1, 2, 4, 5, or Postgraduate), which sets the income threshold and percentage of your repayments. Repayments are usually taken automatically through PAYE.

The money that actually lands in your bank account after income tax, National Insurance, pension, and any other deductions are taken from your gross salary. Also called net pay.

Physical fixed assets a business owns, like computers, machinery, vehicles, and furniture. They're recorded at cost minus the depreciation built up over time.

A reduced pension annual allowance for very high earners (income over 260,000 pounds), shrinking the 60,000-pound limit down to as little as 10,000 pounds. It restricts how much tax-relieved pension the wealthy can build.

A short code (like 1257L) your employer uses to work out how much tax-free pay you get and how much tax to deduct. The numbers reflect your Personal Allowance; letters flag special situations.

A graded review (A to F) of how well you're using allowances, reliefs, and tax-saving opportunities, with flagged risks. It's a quick way to spot money left on the table or compliance gaps.

The official form you send the tax authority each year reporting your income and working out the tax you owe. In the UK it's the Self Assessment return; in the US it's Form 1040.

An agreement between two countries that decides which one taxes particular income and provides relief from being taxed twice. The UK-US treaty is important for people with income or ties in both.

The standardized dictionary of tags used to label each figure in iXBRL accounts so software and HMRC can read them automatically. Each line item maps to a defined "concept" in the taxonomy.

A relief that stops a one-off gain from a life insurance policy or bond pushing you into a higher tax band in a single year. It spreads the gain over the years you held the policy.

The profit a company makes from its main business activity, adjusted for tax by adding back disallowable costs like depreciation and entertaining. It's the core figure Corporation Tax is charged on.

An IRA where contributions may be tax-deductible now and the money grows tax-deferred, but withdrawals in retirement are taxed. It suits people who expect a lower tax rate later.

The unique benefit of a US Health Savings Account: contributions are tax-deductible, growth is tax-free, and withdrawals for medical costs are tax-free too. No other US account offers all three.

The Thrift Savings Plan, the US federal government and military's version of a 401(k) retirement plan. It offers low-cost funds and the same pre-tax, tax-deferred savings benefits.

The total sales income a business earns from its main trading activity over a period, before deducting any costs. It's the "top line" of the profit-and-loss account.

The total income a self-employed person takes in before subtracting any business expenses. Profit (turnover minus allowable expenses) is what's actually taxed.

An IRS charge for not paying enough tax during the year through withholding or estimated payments. You avoid it by paying as you go via quarterly estimates or higher withholding.

US tax on profit from selling investments or property. Assets held over a year get lower "long-term" rates; those held a year or less are taxed as ordinary income at "short-term" rates.

Unique Taxpayer Reference, a 10-digit number HMRC gives you (or your company) to identify you for tax. You need it to file a Self Assessment or Corporation Tax return.

Value Added Tax, a 20% tax added to most goods and services in the UK. Businesses above the turnover threshold must register, charge it to customers, and pass it to HMRC after reclaiming VAT on their own purchases.

The status of a business that has signed up to charge and reclaim VAT, required once taxable turnover passes the registration threshold. Registered businesses must file regular VAT returns.

A Venture Capital Trust, a listed fund that invests in small higher-risk companies and gives investors 30% income-tax relief plus tax-free dividends. Shares must be held for five years to keep the relief.

The year-end form a US employer gives employees showing wages paid and taxes withheld. You use it to file your federal and state returns — it's the US counterpart of the UK P60.

The form you give a US employer telling them how much tax to withhold from your paychecks. Getting it right avoids a big bill or an overly large refund at tax time.

The amount of federal income tax your employer holds back from each paycheck, set by the details on your W-4 form. The goal is to have your withholding roughly match your actual tax for the year.

Tax deducted at source from a payment (like foreign dividends or interest) before you receive it, and sent straight to the tax authority. You may be able to reclaim or credit it against your home tax.

A pension your employer sets up, into which both you and they pay. Under auto-enrolment most employees are signed up automatically and the employer must contribute too.