UK Money, Finance & Tax Glossary

Assets – Anything you own that has value, such as cash, property, or investments.
Liabilities – Debts or obligations you owe, like loans, credit cards, or mortgages.
Budget – A spending plan showing how you’ll use your income for expenses, savings, and goals.
Emergency Fund – Savings to cover unexpected costs like job loss, car repairs, or medical bills.
Net Worth – The total value of your assets minus your liabilities.
Disposable Income – Money left after taxes and essential living costs are paid.
Cost of Living – How much money you need to cover basic expenses in a specific location.
Inflation – The rise in prices over time, reducing the purchasing power of money.
Interest Rate – The percentage charged or earned on money you borrow or save.
APR (Annual Percentage Rate) – The total yearly cost of borrowing money, including fees and interest.

Shares – Units of ownership in a company.
Stock Market – A marketplace where shares of companies are bought and sold.
Dividend – A payment companies make to shareholders from profits.
ETF (Exchange-Traded Fund) – A basket of investments traded on the stock market.
Index Fund – A fund that matches the performance of a specific stock market index, like the FTSE 100.
Bond – A loan to a company or government that pays interest over time.
Capital Gains – Profits made from selling an asset for more than its purchase price.
Portfolio Diversification – Spreading investments across different assets to reduce risk.
Risk Tolerance – Your comfort level with potential investment losses.
Liquidity – How quickly you can turn an asset into cash without losing value.

ISA (Individual Savings Account) – A UK account that lets you save or invest without paying tax on returns, up to an annual limit.
Cash ISA – A savings account with tax-free interest.
Stocks and Shares ISA – An investment ISA allowing tax-free returns on shares, funds, and bonds.
Lifetime ISA (LISA) – An ISA for first-time home purchases or retirement savings, with a government bonus.
ISA Allowance – The maximum amount you can put into ISAs in a tax year.
Junior ISA – A tax-free savings account for children under 18.
Help to Buy ISA – A government-backed savings scheme for first-time home buyers (closed to new applicants).

Income Tax – Tax on earnings from work, pensions, and some savings and investments.
Capital Gains Tax (CGT) – Tax on profit from selling certain assets like shares or property.
Inheritance Tax (IHT) – Tax on an estate after someone dies, if above the threshold.
Nil-Rate Band – The part of an estate that’s tax-free for IHT purposes.
Business Property Relief (BPR) – A tax relief reducing or removing IHT on some business assets.
Personal Allowance – The amount you can earn before paying Income Tax.
Dividend Allowance – The amount of dividend income you can earn tax-free.
Stamp Duty Land Tax (SDLT) – Tax on buying property or land in England and Northern Ireland.
Council Tax – Local tax based on the value of your home.

FIRE Movement – A lifestyle aiming for Financial Independence and Retire Early through aggressive saving and investing.
Pension – A retirement savings plan providing income after you stop working.
Defined Contribution Pension – A pension where contributions are invested and retirement income depends on investment performance.
Defined Benefit Pension – A pension paying a guaranteed income based on salary and years of work.
Retirement Age – The age you can access your pension or stop working.
Annuity – A financial product providing a guaranteed income for life or a set period.
State Pension – A regular payment from the government after reaching State Pension age, based on National Insurance contributions.

Credit Score – A number representing your creditworthiness to lenders.
Credit Report – A record of your credit history, including loans, repayments, and defaults.
Debt Consolidation – Combining multiple debts into one loan, often at a lower interest rate.
Overdraft – Borrowing from your bank account when you spend more than you have.
Secured Loan – A loan backed by an asset (like a mortgage).
Unsecured Loan – A loan not backed by an asset (like a personal loan).