A-Z of Tax Terms for UK Business Owners

Do you find yourself getting confused by all of the terminology when discussing tax? If you do, our tax consultants have put together an A-Z of UK tax terms to help make things clearer.  

 

Don’t forget that if you’d rather have an accountant look after all of your financial matters, as well as a dedicated tax expert who can help you to reduce your bills, get in touch with the team at TreyBridge today. 

Annual Allowance: The maximum amount of tax-free pension contributions that can be made in a year. 

 

Annual Tax Summary: A summary of the amount of tax paid and how it has been spent, provided by HMRC to taxpayers. 

 

Basic Rate: The lowest rate of income tax paid by UK taxpayers. 

 

Business Rates: Local taxes paid on non-domestic properties used for business purposes. 

 

Capital Gains Tax (CGT): A tax on the profits made from the sale of certain assets, such as property or shares. 

 

Compliance: The process of ensuring that taxpayers comply with tax laws and regulations. 

 

Corporation Tax: A tax on company profits. 

 

Deductions: Allowable expenses that can be subtracted from an individual's taxable income to reduce their tax liability. 

 

Dispute Resolution: The process used by HMRC to resolve disputes with taxpayers. 

 

Dividend: A payment made to shareholders from a company's profits after tax. 

 

Dividend Tax: A tax on the income received from shares in a company. 

 

Electronic Filing: The process of submitting a tax return electronically through the HMRC online service. 

 

Employment Allowance: A government scheme that provides financial support to employers to help them reduce their National Insurance contributions. 

 

Enterprise Investment Scheme (EIS): A government scheme that provides tax incentives to investors who invest in small, high-risk companies. 

 

Excise Duty: A tax on goods such as alcohol, tobacco, and fuel. 

 

Flat Rate Scheme: A simplified scheme for small businesses that allows them to pay a fixed rate of VAT rather than calculating it on each transaction. 

 

Foreign Income: Income earned from sources outside of the UK, which must be reported on a UK tax return. 

 

Fraud Investigation Service: The unit within HMRC responsible for investigating cases of tax fraud. 

 

Gift Aid: A government scheme that allows charities to claim back the tax paid on donations made by UK taxpayers. 

 

High Income Child Benefit Charge: A tax charge that applies to individuals who receive child benefit and have an income above a certain threshold. 

 

High Net Worth Unit: The unit within HMRC responsible for dealing with the tax affairs of the UK's wealthiest taxpayers. 

 

HM Revenue & Customs (HMRC): The UK government department responsible for collecting taxes and enforcing tax laws. 

 

Income Tax: A tax on income earned from employment, self-employment, and investments. 

 

Inheritance Tax: A tax on the estate of someone who has died. 

 

Job Expenses: Expenses that can be claimed by employees who incur costs as a result of their work, such as travel expenses. 

 

Job Retention Scheme: A government scheme that provided financial support to employers to help them retain staff during the COVID-19 pandemic. 

 

Key Dates: Important deadlines for filing tax returns, making payments, and submitting relevant documents to HMRC. 

 

Key Information Document (KID): A document that must be provided to individuals who are considering investing in certain financial products, such as stocks and shares ISAs. 

 

Key Performance Indicator (KPI): A measure used to assess the performance of a business, such as revenue or profit margin. 

 

Late Filing Penalties: Penalties imposed by HMRC for late submission of tax returns. 

 

Lifetime Allowance: The maximum amount that can be held in a pension scheme without incurring a tax charge. 

 

Limited Company: A type of business structure where the company is a separate legal entity from its owners. 

 

Local Compliance: The unit within HMRC responsible for dealing with tax compliance issues at a local level. 

 

Making Tax Digital: A government initiative to digitise the tax system in the UK. 

 

Married Couples Allowance: A tax allowance that can be claimed by married couples or civil partners, where one partner was born before a certain date. 

 

National Insurance: A tax paid by employees, employers, and the self-employed that provides entitlement to certain state benefits. 

 

Online Services: HMRC's online platform that allows taxpayers to manage their tax affairs online. 

 

Overdraft: A borrowing facility provided by banks that allows businesses to access extra funds when needed. 

 

PAYE (Pay As You Earn): The system used by employers to deduct income tax and National Insurance contributions from employees' salaries. 

 

Payroll Giving: A scheme that allows employees to donate to charity directly from their pay before tax is deducted. 

 

Personal Allowance: The amount of income that can be earned before income tax is payable. 

 

Quarterly Instalment Payments: Payments made by self-employed individuals to HMRC to cover their tax liability. 

 

Quick Assessment: An assessment of a person's tax liability that is made based on their self-assessment tax return, rather than a separate assessment being issued. 

 

Research and Development (R&D) Tax Credits: Tax credits available to businesses that undertake R&D activities. 

 

Residence Test: A test used to determine whether an individual is resident in the UK for tax purposes. 

 

Revenue (when referring to HMRC): The amount of money collected by HMRC through taxes. 

 

Self-assessment: The process used by individuals and businesses to report their income and pay their tax liability. 

 

Tax Code: A code used by HMRC to determine how much income tax should be deducted from an employee's salary. 

 

Tax Credits: Payments made by the government to support low-income households. 

 

Uniform Business Rate: A standard tax rate applied to business properties for the purpose of calculating business rates. 

 

Unique Taxpayer Reference (UTR): A 10-digit reference number used by HMRC to identify taxpayers. 

 

Universal Credit: A government benefit that replaces six existing benefits, including Tax Credits. 

 

Value Added Tax (VAT): A tax on goods and services. 

 

VAT Return: A return submitted to HMRC by VAT-registered businesses, showing the amount of VAT charged on sales and the amount of VAT paid on purchases. 

 

Venture Capital Trust (VCT): A type of investment trust that invests in small and medium-sized businesses, providing tax benefits to investors. 

 

Withholding Tax: A tax deducted from payments made to non-UK residents. 

 

Working Tax Credit: A government benefit that provides financial support to low-income individuals who are working. 

 

eXemption: An amount of income or a type of transaction that is not subject to tax. 

 

eXternal Stakeholders: Individuals and organisations outside of HMRC who have an interest in the work of the organisation, such as taxpayers and professional bodies. 

 

Year-End: The end of the tax year, which is 5th April in the UK.  

 

Yield: The amount of income generated by an investment, such as interest or dividends. 

 

Zero-Rated: A term used to describe goods and services that are subject to VAT at a rate of 0%. 

By taking on TreyBridge Accountants to handle your tax, you’ll enjoy multiple benefits: 

 

Tax planning: We can help you plan to your finances in a tax-efficient manner and minimise your tax liability. We do this by identifying any deductions and credits that you may be eligible for, and help you to make informed decisions about investments, retirement plans, and other financial decisions that can impact your taxes. 

 

Tax compliance: In the process, we will ensure that you comply with all tax regulations and file your tax returns accurately and on time. We can also help you to navigate complex tax rules and regulations, reducing the risk of errors or omissions on your tax returns. 

 

Audit support: If your business needs to undergo an audit by HMRC, we can provide support and guidance throughout the process, helping you to prepare the necessary documentation and representing you during the audit. 

 

Tax disputes: In the event of a dispute with HMRC, we can provide advice and representation to help resolve the issue and protect your interests. 

 

Business structure: We can also help you to select the most appropriate business structure for your needs, which can have a significant impact on your tax liability. Our tax consultants will advise you on the tax implications of different structures, such as a sole proprietorship, partnership, or limited company. 

Ready to make tax a much more simple process whilst reducing your tax obligations? To find out more, call our Northern office on 01482 235575, our London office on 0207 885 0605, or fill in the contact form below.