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Jargon buster

Updated on 24 November 2020

In this easy-to-understand A-Z glossary we aim to explain the meaning of certain tax terminology.

Image of the word jargon surrounded by other words relating to language

A-C

Appeal  An appeal is how you object to or dispute a government decision. Government departments’ decisions are not always right. If you think that a decision about your tax, tax credits or other benefits is wrong, you might be able to ‘appeal’ that decision.
Assessment A formal statement of your tax position for a particular period. If you don’t agree with it, you have to make an appeal within a defined timeframe shown on the assessment.
Blind person’s allowance This is a special allowance that blind people or people with very poor eyesight can claim on top of their personal allowance. If you are eligible for it, you might be able to earn extra income before paying income tax. If you are certified blind and are on a local authority register, or if you live in Scotland or Northern Ireland and are unable to perform any work for which eyesight is essential, you can claim blind person’s allowance.
Civil partners  Civil partners are two people, often but not always, of the same sex who live together in a relationship similar to marriage. They form a civil partnership when they legally register their partnership in front of witnesses.
Class 2 contributions  These are a type of National Insurance contribution paid by people who are self-employed. They are a fixed weekly amount.
Class 4 contributions These are another type of National Insurance contribution paid by people who are self-employed. The amount depends on the taxable profit of your business.
Coding notice A coding notice is a letter which tells you what your tax code is and how it has been worked out. It is important you check to make sure it is right otherwise you might pay too much or too little tax. You should get help if you cannot understand your coding notices.
Complain If you are unhappy about how an organisation has treated you or dealt with your case, you can complain. Most organisations have a formal complaints procedure.
Compliance checks  This means HM Revenue & Customs want to ask you questions about information or forms you have sent in such as a tax return or tax credits claim.
Council tax Council tax is the local tax in England, Scotland and Wales. You pay it to your local council, and they use it to provide local services. In Northern Ireland you will pay rates instead of council tax.

D-F

Decision A letter or other document that lets you know what HMRC’s position is on a particular matter you have raised with them. If you don’t agree with a decision, you can appeal against it.
Department for Social Development  This is the government department that is responsible for most state benefits in Northern Ireland.
DWP The Department of Work & Pensions (DWP) is the government department that is responsible for most state benefits in England, Scotland and Wales.
Domicile Your place of domicile depends on a number of things such as your family history and your longer-term plans. If you and your parents came from another country and you still think of that other country as your natural home, you will probably have a foreign or non-UK domicile.
Earnings Earnings are money or income in return for the work you do or profits from your business. Earnings can include other things like your employer allowing you to use a car for your private use, providing you with accommodation or paying for your meals.
Employee  An employee is someone who works for somebody else (called an employer). An employer will often ask an employee to sign a contract of employment – a document that records the terms they will work on (for example: working hours, how much you will be paid, what happens if you are ill). There does not have to be a written contract for you to be legally counted as an employee.
Employer An employer is a person or business that has to give work to someone and pay them for it under a contract of employment. The employer directs and controls the work that the employee does. You can be an employer even if you are self-employed, if you pay other people to do work for you.

G-I

Gig economy This is a fairly new and developing area of the economy, for those who work on an ad hoc basis or ‘gigs’. These workers have traditionally been classed as self-employed for employment law purposes, however this view has recently been challenged by individuals claiming they should be reclassified as ‘workers’ for employment law.
GOV.UK This is the main website for most of the UK government departments and includes information on benefits, student loans and tax. 
Government Gateway This is a central place where you can register to use online government services.
HMRC

HM Revenue & Customs (HMRC) are the part of the government that deals with tax, National Insurance contributions, working tax credit, child tax credit and child benefit.

Income

Income is money you get, for example from work you do or from interest on savings.

Income tax Income tax is tax that you pay on most types of income.
Independent tribunal An independent tribunal is a group of people who look at appeal cases. In a tax context, they will look at your case if you are not happy with a decision about your tax or any state benefits that are administered by HMRC.
Investments

These are things you buy because you think they might be profitable and earn you money in the future. Investments can include property, shares, savings in a bank account and paintings.

J-L

Jobcentre Plus

Jobcentre Plus is part of the Department of Work & Pensions (DWP). They are responsible for some state benefits, including jobseeker's allowance, employment and support allowance and universal credit. In Northern Ireland these benefits are dealt with by the Jobs and Benefits Office.

Land & Property services

Land & Property Services is the department responsible for collecting rates in Northern Ireland.

Local authorities

Local authorities (also known as councils) are responsible for the services in the area where you live. They also collect council tax.

Local taxes

Local taxes are taxes you pay to your local authority or Land & Property Services (in Northern Ireland). They pay for local services in your community.

M-O

Mandatory reconsideration

The first stage of the appeal process for decisions on tax credits. The mandatory reconsideration process asks HMRC to reconsider their original decision.

Married couples

Married couples are two people who have got married, by giving notice and having either a religious or civil ceremony in front of witnesses.

National Insurance contributions

You pay National Insurance contributions to HMRC if you are aged 16 and over, and you are an employee or self-employed. You can also pay voluntary contributions. The contributions build up your entitlement to state benefits. You usually stop paying contributions once you reach state pension age.

National Insurance number Your National Insurance number is your personal reference number for the whole UK system of National Insurance and state benefits. This number ensures the National Insurance contributions you pay are noted on your record with HMRC.
National living wage

 This is a premium on the national minimum wage for employees aged 25 and over.

National minimum wage

The national minimum wage sets the minimum hourly rates that employers must pay their employees in the UK. HMRC enforce the rules.

P-R

Parental settlement

This is when your income is taxed as if it belongs to your parents (or step-parents) and not you. This occurs if you are under 18 years old, not married or in a civil partnership and your parents (or step-parents) have given you funds that produce an annual income of over £100.

Pay As You Earn This is a system of collecting and paying income tax and National Insurance contributions. If you are an employee, your employer deducts income tax and National Insurance contributions from your income, and pays them to HMRC for you.
Payslip A payslip is a statement that contains details of your pay and any tax and National Insurance contributions deducted as well as any student loan repayments. Your employer might give you a paper payslip or send it to you electronically.
Penalty

A penalty is a fine you might have to pay because you have broken a rule. For example, late filing of your Self Assessment tax return.

Pension age

This is the age at which you can claim your pension. Find out when you will reach state pension age using the calculator on GOV.UK.

Personal allowance

Most people who live in the UK can claim a personal allowance. This is the amount of income you can have each tax year before having to pay income tax.

Personal Tax Account

This is an online system operated by HMRC on GOV.UK. It allows you to manage some of your tax affairs online.

Rates

Rates are a local tax in Northern Ireland, which you pay to Land & Property Services. Councils use your rates to provide local services.

Residence

To decide your tax residence position, you must follow the Statutory Residence Test.
What country you are resident in for tax purposes partly depends on the number of days you spend there.

S-U

Salary Your salary is the regular payment of your wages from an employer. Your salary might include items other than just money. For example, your employer might also pay for private medical insurance, accommodation for you or other things which have value.
Scottish income tax From 6 April 2017 the Scottish Parliament has had the power to set its own bands and rates of income tax for Scottish taxpayers on non-savings income. This income tax is collected and administrated by HMRC.
Self Assessment

This is the system for giving details of your income and gains to HMRC. It involves completing tax returns.

Self-employed

If you set up your own business and take responsibility for its success or failure, you might be self-employed.

Social Security Scotland

The department of the devolved Scottish administration that is responsible for paying certain state benefits.

State benefits

State benefits are paid by the UK Government to people who meet certain conditions, for example people with children, or people on a low income.

Student loans

These are loans from the Student Loans Company, a government-owned organisation that provides loans and grants to students at universities and colleges in the UK.

Tax Tax is money paid to the government to pay for services and to run the state. HMRC collect most taxes, but some taxes (such as tax on vehicles) are collected by other bodies. There are also local taxes for the area where you live.
Tax credits

There are two tax credits – child tax credit and working tax credit. You may be eligible to claim one or both of them, depending on your household circumstances. HMRC deal with claims for tax credits.

Tax free

If something is tax free, it means you do not need to pay any tax on it. Something which is tax free might also be described as 'exempt from tax', 'not taxable' or 'non-taxable'.

Tax residence status

 Your tax residence status is one factor in deciding whether or not you have to pay UK tax on your income and gains.

Tax return

If you are within Self Assessment, you have to complete a tax return every year to tell HM Revenue & Customs about your income and gains. You can also claim allowances and reliefs. Some people have to complete a tax return even if their tax is simple or there is no tax to pay.

Tax year

The tax year is from 6 April in one year to the following 5 April. You might see the tax year written as ‘2020/2021 tax year’. This means 6 April 2020 to 5 April 2021.

Textphone A textphone is something that can be used by people with hearing difficulties. A textphone, sometimes called a Minicom, is similar to a standard telephone. It plugs into your telephone socket at home, and has a keyboard and display that lets you type and read conversations.
Text relay Text relay (previously called tTypetalk) is a service that allows textphone users to contact people who are using a standard telephone. It does this by using a 'relay assistant' who changes type to talk and talk to type.
Universal credit Universal credit is a single benefit run by the DWP which combines benefits for in and out of work support, housing, and childcare costs, with additional payments for people who have disabilities or caring responsibilities. Tax credit claimants will be moved onto universal credit over the next few years.

V-Z

VAT

Value Added Tax is a tax on expenditure that is charged by registered traders. If turnover in a rolling12-month period is more than £85,000, the trader will most likely be obliged to register for and charge VAT on their sales invoices.

Verify

Verify is a government portal to allow you to use online digital services. It can be used to make claims, for example, for the marriage allowance and tax refunds.

Wages

Wages are the money your employer pays you in return for the work you do for them. Wages can also include other things, such as your employer giving you something other than cash that has a value or benefit to you.

Welsh income tax From 6 April 2019 the Welsh government has the power to partially set the rates of income tax for Welsh taxpayers on non-savings income, the UK government will also set part of these tax rates. This income tax is collected and administrated by HMRC.

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