A
Accommodation
This is where you live. It includes where you live with your parents, a hostel,
somewhere you rent, or a home you are buying on a mortgage.
Accounts
If a bank or building society holds money for you, it holds it in an account. A
current account is an everyday account which you use to pay money in or take money
out. It helps you to budget and manage your money and pay for things in a convenient
and secure way. A deposit account is for savings.
Accurate figure
If you believe an estimate on your electricity or gas bill is wrong, you can ask
the company to send someone round to read the meter. This means they will have an
accurate figure of the power you have used. They can even show you how to read the
meter yourself, so you can phone up and give them an accurate reading in the future.
AER
This stands for 'annual equivalent rate'. It shows what the interest rate would
be if the interest on savings was paid just once a year. Actually interest is paid
more often, such as four times a year. You can use the AER to compare the interest
rates of different accounts directly with each other. The higher the AER, the more
interest you will get on your savings. If you borrow money, the AER will show you
how much interest you will pay. The lower the AER, the less interest you will pay.
After tax
This is what you are left with after you have paid tax. You must pay tax on most
types of income (such as interest from savings, earnings from your job and pensions),
but everyone can earn some money before they have to pay tax. In 2007 to 2008, you
can earn £5225 before you start to pay income tax. If you are 65 or over, this rises
to £7550. Some older people may get a higher allowance.
All risks
An all-risks insurance policy will cover extra risks such as the loss of or damage
to possessions which you have taken outside your home.
APR
This stands for 'annual percentage rate'. This tells you the cost of a loan as a
yearly interest rate. It includes the interest and any other charges. You can use
this to easily compare the cost of one loan with another. For example, a loan with
an APR of 15% is more expensive than one with an APR of 11%.
ATM
ATM stands for 'automated teller machine'. These are also known as 'cash machines'.
You can find them in many places including banks, shopping centres and railway stations.
You can use them to get money out of your account. You need a cash withdrawal card
and a personal identification number (PIN) before you can use an ATM.
Available credit
This is the amount of money you can borrow on a store card or credit card. It is
your credit limit less the amount you have already borrowed.
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B
Balance brought forward
This appears at the beginning of a bank or credit card statement. It shows the amount
of money you had in your account, or you owed, at the end of your last statement.
Bank
This is an organisation that makes money by providing a range of financial services,
such as current and deposit accounts.
Bank loan
This is money you borrow money from your bank. You pay interest on the loan - the
amount you pay is agreed when you take the loan out.
Basic bank account
You get a basic bank account from a bank or building society. You can use it to
pay in money, get cash out and pay bills. It does not let you spend more than you
have in your account, so you cannot go overdrawn and run up overdraft charges.
Birth certificate
All children born in the United Kingdom are registered on the Government's National
Register of Births and Deaths, and issued with an official birth certificate. It
is an important record of your identity. If you lose your birth certificate or if
it stolen, report it to the police and go to your nearest register office to apply
for a new one.
Borrowing
If you borrow money, you intend to pay it back. You might borrow informally from
friends and family or take out a formal loan from a bank, for example, with a written
agreement.
Bounced cheque
If someone writes a cheque but there isn't enough money in their account to pay
it, the bank will refuse to pay it and 'bounce' the cheque. The bank usually sends
the cheque back to the person it was written out to (the payee) with 'return to
drawer' stamped on it. If this happens to you, you should ask the person who wrote
the cheque to give you cash instead.
Buffer zone
Some bank or building society accounts have a 'buffer zone'. This is a free temporary
overdraft so you can take money out up to a fixed amount, even if you don't have
the money in your account. You will not be charged for being very slightly overdrawn
on this basis, as long as you don't go beyond the agreed amount.
Building society
These offer a range of financial services and are similar to banks. Their main role
is to provide mortgages.
Buildings insurance
This type of insurance pays out if the structure (the actual building) of your home
is damaged. For example, it may cover you if tiles fall off your roof during a storm,
or if your house is damaged by fire.
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C
Calendar month
These are the months as shown on the calendar. The number of days can be as low
as 28 (February) and up to 31 (such as March).
Capital
Your capital is the amount of money you have saved or invested.
Cash
Cash is actual money - coins and notes. Cash is the simplest way of buying something.
It is not a good idea to send cash payments through the post, but you can pay bills
such as gas and electricity in cash at post offices and banks.
Cashcards
Cashcards, or cashpoint cards, are the simplest type of account cards. You can usually
only use them at cash machines (with a personal identification number, or PIN) to
withdraw cash, check your balance or print out a mini statement.
Cash flow forecast
This is a forecast of how money will flow into and out of a business. It is usually
split into months.
Cash inflow
If you run a business, the cash inflow is the money you receive through your business.
If the money you receive is more than the money you have to pay out, you have a
'net cash inflow'.
Cash outflow
If you run a business, the cash outflow is the payments out of your business. If
the money you receive is less than the money you have to pay out, you have a 'net
cash outflow'.
Cashflow
This is a record of all the money coming into and going out of a business over a
period of time.
Catalogue
Goods for sale are shown in a catalogue. You can buy them on credit and pay in weekly
or monthly instalments. The goods will usually be delivered by post. The price of
the goods in the catalogue may be more than the price in a shop.
Charges
These are the fees and interest that you have to pay when you borrow money or buy
on credit, for example.
Cheque
A cheque is a written instruction to a bank. If you have your own chequebook with
your current account, you can use cheques to pay money to other people or to get
money for yourself out of your account.
Cheque guarantee card
This is a plastic card issued by a bank or building society to guarantee that the
amount of money on any cheque you write (up to a certain amount) will be paid, whether
or not there is enough money in your account.
Civil partner
A civil partner is someone who has entered into a formal arrangement (known as a
civil partnership) with a same-sex partner so they have the same legal status as
a married couple.
Clearing
This is the time it takes for a bank to transfer money from one account to another.
This is why you usually have to wait a few days before you can take out the money
from your account from a cheque you have paid in.
Compound interest
Interest is the amount of money you pay for borrowing money. When you have to pay
compound interest, the interest due is added to the amount you owe so you have to
pay interest on this as well. This means the amount you owe can increase dramatically
in a short time. Compound interest can also apply to the amount paid on your savings
in a bank or building society.
Comprehensive car insurance
Comprehensive car insurance covers you for accidental damage to your own car as
well as any injury you cause to another person or damage you do to another car.
It also covers you if your car is stolen or damaged by fire. It is more expensive
than third-party insurance.
Consumer
A consumer is someone who buys goods or services for their own use. So, when you
buy groceries or take out an insurance policy, you are a consumer.
Contents insurance
Contents insurance covers the possessions you keep in your home. Some policies will
let you replace damaged items with new ones. The amount you pay for the insurance
will depend on where you live, how big your house is and whether you have a lot
of valuable things.
Council Tax
You pay this tax to the local council for services it provides such as libraries,
the police, local roads and so on.
Credit
If an account is 'in credit', it means that there is some money in it that you can
spend. If you obtain goods or services 'on credit', it means that someone (for example,
a bank or credit company) has given you the money to make the purchase - they have
credited you with the money. You must pay the money back. If you do not pay your
credit card on time, or if you have a history of not paying back other loans, this
will be shown on your file held by a credit reference agency. When shops or banks
check your creditworthiness (how suitable you are to receive credit) and see this
information, you may find it very difficult to get a loan.
Credit card
Credit cards are available from most banks, and allow you to borrow money up to
a certain limit. When you buy something with your credit card, the amount you spend
is added to the total you have already borrowed on the card. Every month you are
sent a statement to show how much you have borrowed and how much you need to repay.
If you do not repay the full amount, you will start paying interest. You can also
get money from cash machines with most credit cards, but this is also borrowed money,
and will be added to your monthly bill. This can be very expensive as you start
paying interest immediately.
Credit history
If you have had trouble paying loans before, or you have any court judgements against
you, you may find it difficult to take out a loan. Your name may be on a list of
people with poor credit histories. You may find that the only lenders that will
offer you a loan charge very high interest rates.
Credit limit
This is the most you can borrow on a store card or credit card without breaking
the card issuer's rules.
Credit record
Your credit record is held by a credit reference agency. It will include whether
you appear on the electoral roll, how reliable you have been at paying back credit
in the past, and any other credit checks made about you.
Credit reference agencies
These agencies hold financial information about you. This information includes your
repayment records for loans, credit, your mortgage and hire purchase and records
of credit checks that have previously been made about you.
Credit risk
This is the risk that you may not repay a loan or credit. The higher someone's credit
risk is, the less likely they are to make their repayments.
Credit union
This is a community-based organisation that offers accounts and loans to its members
at better interest rates than commercial organisations such as banks.
Creditor
A creditor is someone who is owed money. If you borrow money, the person you borrow
it from is your creditor.
Current account
This is a bank or building society account which helps you to:
- manage your money
- pay bills
- receive money and
- keep money safe.
It will give you more services than a basic bank account. For example, you will
get a cheque book.
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D
Debit
When money is taken out of an account, it is 'debited from' that account.
Debit card
You can use debit cards to pay for many things without using cash or a cheque. You
can also use some debit cards in cash machines to take money out of your bank account,
and to guarantee cheques. (If you use your card to guarantee a cheque, the person
you pay your cheque to knows they will get the money from your bank.) When you make
a payment or withdraw cash with your debit card, the money is taken straight out
of your account. You cannot borrow money on a debit card. It is useful when you
are paying in shops, shopping by phone or buying on the Internet.
Debt
If you are in debt you owe money to someone, for example, a bank.
Debtor
A person who owes money is called a 'debtor'.
Defaulted
If you do not make payments when you should, or if you do not pay off a debt, you
have 'defaulted' on the payments.
Dependants
People who are financially dependent on you are your dependants. This is usually
children who live with you, but it could be elderly relatives or someone you care
for.
Deposit
This is an amount of money you pay as a first instalment on goods you want to buy.
You may need to pay a deposit when getting goods on credit.
Deposit accounts
These are used for saving money because they pay higher interest rates than current
accounts. You don't have a cheque book or debit card with a deposit account and
you can't use them to pay direct debits or standing orders.
Direct debits
You can use direct debits to pay bills such as phone bills, and other amounts such
as credit card repayments, automatically from your current account. You tell the
bank to set up the payments and the company you are paying will tell you how much
they will be taking from your account and the date they will be taking it. Direct
debits are a good way of making sure you don't miss any payments and some companies
will reduce your bill if you pay this way.
Discount
This is money which is taken off the price of something. You may need to collect
coupons or vouchers before you can claim the discount. Sometimes shops give a discount
to their employees
.
Driving licences
You get a full driving licence when you pass your driving test. All new licences
carry your photo, to help prevent crime. If you have an old-style licence without
a photograph, you can apply to the DVLA or get a form from the post office to get
one in the new format. If you lose your driving licence or it is stolen, you should
report it to the police.
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E
Electoral roll
This is a list of the names and addresses of people over 18 in the UK. You must
register to be on the electoral roll by law. When your name is on the roll, you
can vote in elections. The electoral roll is checked when you make an application
for credit.
Employee NIC
(see National insurance)
Estimate
An estimate is a guess at the cost of something. An electricity or gas company will
work out an estimate for your bill based on how much electricity or gas you used
at this time of year in the past. Look at the 'meter readings present' column on
one of your bills. If it has an 'E' before the number, the figure on this bill is
an estimate. There will usually also be some information on the bill telling you
whether your bill has been estimated.
Excess
If you make a claim on an insurance policy, the insurance company may ask you to
pay the first £50 (or other amount) of the cost of the claim. The amount they ask
you to pay is the 'excess'. The insurer will then pay the rest of the claim or replace
the goods you are claiming for.
Exclusions
Almost all insurance policies have exclusions. These are events or possessions that
are not covered by the policy.
Expenditure
Your expenditure is the money you spend. It includes things like:
- rent or mortgage
- food
- water, gas and electricity
- phone
- transport
- Council Tax
- childcare
- television licence
- mobile phone
|
- catalogue repayments
- clothes and shoes
- household items
- loans and credit card repayments
- car tax
- Car insurance
- household insurance
- drink and cigarettes
- other expenses
|
Expiry date
This is the date your credit or debit card ends. It is clearly shown on the card.
You cannot use the card after this date.
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F
Fee
This is a sum of money you pay to have a loan or credit arranged for you, for example.
Finance companies
These companies make money by lending to people who want to buy goods on credit.
Most shops use finance companies for their credit deals.
Financial adviser
This can be an individual or firm that can:
- work out your financial needs
- recommend suitable products and
- arrange for you to buy or invest in these products.
Some advisers can also manage investments for you. An adviser must be authorised
by the Financial Services Authority (FSA) and they have to work to strict rules.
Financial records
These are any records to do with money and will include statements, bills, receipts
and so on.
Financial situation
Your financial situation refers to:
- how much money you receive in wages or benefits (or both)
- how much money you have saved up
- how much money you owe and
- any financial arrangements you have made for the future, such as a pension.
Fixed interest rate
Interest rates can go up and down. A fixed interest rate account means that you
are guaranteed that the interest you get will stay the same.
Free buffer zone
(see Buffer zone)
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G
Gross
A gross amount has not had any deductions taken from it.
Gross interest
This is the interest on savings before any tax is taken off.
Gross pay
This is your pay before anything is taken away from it like income tax and National
Insurance contributions.
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H
Health insurance
There are many types of health insurance - some give you a lump sum if you become
ill, others pay you a regular income while you cannot work. Some health insurance
pays for your treatment at a private hospital - and lets you jump the waiting list.
Hire purchase
This is an agreement that lets you take away goods and use them while you pay for
them with regular payments. After a set length of time, when you have paid for the
goods, they will become yours. Cars are often bought this way. You would not own
the car until you have finished paying the hire purchase agreement - so you would
not be able to sell the car until you had paid for it.
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I
Identity
Your identity is who you are. You may be asked to show documents that prove that
you are who you say you are. You can use lots of different documents to prove who
you are including:
- your birth or adoption certificate
- a valid passport or a marriage certificate and
- papers that show your address, date of birth or photo.
The person who needs to see your identity will be able to give you a full list of
documents that you can use.
In credit
'In credit' means that there is money available to spend in an account.
Income
Your income is the money you have coming in. It includes things like wages, benefits
(like income support or child benefit) and child maintenance payments.
Index linking
Index linking means that the value of the financial product or service (for example,
a pension or insurance policy) is increased in line with an index such as the Retail
Price Index which measures how much everyday prices have gone up.
Inflation
This is the general increase in the cost of everyday items such as food and travel.
Instalments
These are repayments made over an agreed period of time to pay off goods bought
on credit or to pay off a loan taken out to buy them.
Instant access
If you have an instant access account, you can get your money immediately without
having to tell your bank or building society in advance.
Insurance cover
Insurance cover describes what you are insured for. For example, if you have a car
you might have comprehensive cover or only be covered for third party, fire and
theft.
Insurance premium
This is the money you pay to an insurance company for your insurance. Some premiums
are paid every month, others are paid every three months or once a year.
Interest
This is the money you get on your savings in a bank or a building society. It is
also, the cost you pay when you borrow money through a loan or credit agreement.
It is usually worked out as a percentage of the money you have borrowed.
Interest rate
This is the percentage of money that is paid on savings or loans. For example, a
savings account offering an interest rate of 10% would pay you more interest than
one offering 5%. But, if you take out a loan with an interest rate of 10%, it will
cost you more than one with a rate of 5%.
ISA
ISA means 'Individual Savings Account'. You do not have to pay tax on the interest
you receive from an ISA. There are mini and maxi ISAs and there are strict rules
about how many ISAs you can hold and how much money you can pay into them each year.
Your bank or building society will be able to explain the rules for ISAs to you.
Itemising
(see Phone call itemising)
L
Legal status
Your legal status can refer to whether you:
- are married, single, divorced, widowed or separated
- are a citizen of the UK or
- have a right to work in this country.
Life insurance
This type of insurance pays out a lump sum to your family if you die. You must have
life insurance if, for example, you are paying an interest-only mortgage. If you
die before you have paid the mortgage off, the insurer will pay it off with a lump
sum. You can insure for more than the cost of the mortgage to make sure that your
family has some money to live on as well.
Loan
This is a sum of money which you borrow. Usually you have to pay interest on the
loan.
Loan shark
This is someone who lends money and charges a very high rate of interest. They do
not hold a consumer credit licence so they are working illegally.
Loyalty cards
Loyalty cards are offered by some shops and supermarkets to encourage people to
shop there. You cannot usually use your loyalty card to pay for anything, but every
time you spend money at that shop you will be given 'points' on your card. When
you have saved enough points, you may be able to use them to help pay for your shopping,
or perhaps other things such as air miles.
Lump sum
A lump sum is a one-off payment. Some people have insurance policies that pay a
lump sum if they have an accident or are ill. Other people prefer to have a policy
that pays a regular income over a long period of time.
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M
Maximum withdrawal
Most cash machines check your bank account before giving you any money and will
not give you more than there is in your account. Also there is sometimes a limit
on how much you can withdraw every day.
Minimum payment
Credit or store card statements tell you your minimum payment. This is the smallest
amount you must pay off your debt that month.
Mortgage
A mortgage is a loan taken out to buy property, for example, a house. If you do
not keep up the mortgage repayments the mortgage company who lent you the money
can repossess (take over) your house. A mortgage is a 'secured loan'. This means
the loan is secure for the mortgage company because they cannot lose money on it.
They get the value of your house if you don't pay back the loan.
Motor insurance
There are two types of motor insurance. Third-party insurance is the minimum insurance
cover you need if you drive a car on public roads. You may prefer to take out a
comprehensive policy for your car.
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N
National Insurance
If you work you must pay National Insurance. It is a form of taxation that will
be taken off your pay before you get it. You usually need to pay National Insurance
before you can claim certain social security benefits, including the State Pension
when you retire. You should have a plastic National Insurance card with your National
Insurance number on it. If you haven't got one, you should ask your nearest Social
Security office for one.
Net income
Your net income is the total you earn in a week, month or year after any deductions
for tax and National Insurance.
Net interest
This is interest which has already had the tax taken off it.
Net pay
This is the pay you actually get. All the deductions such as tax and National Insurance
have been taken off before you get it.
New Deal for lone parents
The New Deal for lone parents is a special scheme that helps single parents get
back to work if they want to. If you want to get a qualification to help you find
work, this scheme may offer you help with childcare costs while you are studying.
You can find out more about the New Deal for lone parents from your local job centre.
Non-priority debts
These are less-important debts. The people you owe the money to can take you to
court to make you pay but they cannot take any other action (such as cutting off
your gas or electricity or repossessing your home).
Notice
If you have a deposit account, this is the time you must wait to get your money
after telling your bank or building society that you want to take it out. If you
do not wait this time, you can have your money but you could lose some of the interest
on your account.
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O
Occupational pension
This is the pension you will receive if you join your employer's pension scheme.
You may have to make payments towards the pension. The pension you get may depend
on how long you have worked for a company and how much your final salary is. Or,
you may have a cash fund to buy an annuity - a special type of investment which
will pay you a regular sum for the rest of your life.
Office use only
If you see this on part of a form, you don't have to fill in that part. The people
you are sending the form to will fill it in themselves.
Overdraft
If you spend more money than you have in your current account you will have an overdraft.
Before you spend more than you have got, you can ask the bank if they can arrange
to lend you some money for a short time. This is known as an arranged overdraft
and you pay an agreed rate of interest on the overdraft (the amount you owe). If
you go overdrawn without asking the bank first, they might refuse to pay any cheques
you write and charge you a high interest rate on the money that you owe them.
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P
P45
This is a document that your employer has to give the tax office so that the right
amount of tax can be deducted from your earnings. When you leave a job, by law your
employer must give you your P45.
Passport
A passport is a legal document that you must show when you travel to other countries.
Up-to-date passports are a good form of identification, because they are an official
Government record of your identity, and they contain your photo. You can get a passport
application form from your local post office who, for a small charge, will make
sure you have filled it in properly. New passports cost about £66 for adults. If
you lose your passport, or if it is stolen, report it to the police.
Paying in
If you pay in money, you put it into your account. This could be cash or cheques.
Pay period
The year is divided into equal periods for getting paid starting from early April
(which is also start of the tax year). If you are paid monthly, there are 12 pay
periods, if you are paid weekly, there are 52.
Payee
This is the person you are paying money to when you write out a cheque.
Paying-in slip
When you pay money into your account, you need to fill in a paying-in slip. You
fill in how much you are paying in and whether it is in cash, cheques, or both.
Your bank or building society will give you a book of paying-in slips when you open
the account, and there are usually some at the back of your chequebook as well.
Pension
This is a regular payment paid to someone who has reached retirement age (at the
moment this is 60 for women and 65 for men).There are four main types of pension:
- occupational pensions
- personal pensions
- stakeholder pensions and
- State Pensions.
Pension deductions
Payments into a pension scheme arranged by your employer will be taken automatically
from your pay. This will show up on your payslip as 'pension deductions'.
Personal loan
Many different companies offer personal loans. These are usually loans that you
can use to pay for whatever you want. But, as with all loans, make sure you check
the interest rate and conditions first to get the best deal.
Personal pension
You can arrange a personal pension through a bank, building society or life insurance
company. You can save as much as you like in a personal pension and you can start
receiving an income from a personal pension when you are 50.
Phone call itemising
Most phone bills break down the cost of calls. This may include a list of the more
expensive calls - international calls and calls to mobiles, for instance - as well
as the date and time they were made. This breakdown can help you to work out:
- if a bill is correct
- how you may be able to save money by phoning at off peak times and
- if another service package may be more suitable for you.
PIN
PIN stands for 'personal identification number'. This is a code of four numbers
for you to use with a cash machine card. The PIN is for security so you must remember
it and keep it secret. It identifies you and anyone else using your account. Never
write down your PIN and keep it with your card (it is best not to keep it written
down at all), and never tell it to anyone else - not even the people who work in
the bank.
Policy
Policy is another word for plan or cover. When you take out insurance, you receive
a policy from the insurance company telling you the kind of events you are insured
for, and how much money the company is prepared to pay out. The policy is your contract
with the insurance company.
Premium
This is the amount you have to pay to buy insurance. You may be able to pay the
premium in monthly instalments.
Priority debts
These are debts which are more important than others because the law lets the people
you owe the money to take serious action against you. Priority debts include things
like:
- a mortgage because your home could be repossessed (taken off you) if you do not
keep up your mortgage repayments and
- fuel bills because your gas or electricity could be cut off.
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Q
Quarterly statements
Statements are written records of how much money you have in your account. The bank
sends them to you automatically. A quarterly statement comes every three months.
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R
Receipts
This is money coming in to a company from selling goods and services, for example.
Repayments
These are the sums of money you pay back weekly or monthly on your loan or credit.
Return
The return is the profit you make if you invest your money. Usually if an investment
offers a high return, it will be quite risky.
Rights
This is the protection that is given to you by law. For example, you have a right
to compensation if your bank goes bankrupt and you lose money.
Risk
This is the possibility that you may lose money if you savings fall in value or
interest rates or inflation rates change.
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S
Savings
You savings are any money you put aside for future use. You may keep the money in
a deposit account - or even under your bed. 'Rainy day' savings are useful for emergencies
and you need to be able to get hold of them easily while you can build up longer
term savings to give a 'nest egg'.
Savings accounts
Savings are often kept in bank, building society or National Savings accounts. The
amount you put in does not fall in value but may grow as interest is added.
Secured loan
A secured loan means that you borrow money against the cost of something you own.
This way the lender can be sure that if you cannot make the repayments, they will
get their money back. For example, some homeowners borrow money against their houses.
This means that if they cannot make the payments, the lender may repossess (take
over) their house.
Shares
If you invest in a company's shares, you become part owner of that company, along
with all the other shareholders. Some shares pay you an income (called dividends)
regularly. All shares carry some risk. If the share price rises, you will make a
profit when you sell them, but if the share price falls, you will make a loss.
Short term
This usually means a period of time no longer than five years and often a lot shorter.
Signatory
A signatory is a person who signs a document. For instance, if you are making an
application and sign a form, you are the signatory.
Stakeholder pension
This is a type of personal pension which may suit you if you are self-employed or
not working, or if your employer doesn't have a company pension scheme. You can
pay as little as £20 a month and you don't have to pay every month.
Standing order
This is a way of paying regular amounts to a person or organisation automatically.
You tell your bank how much to pay and when to pay it. It is your responsibility
to make any changes to the payment if it needs to alter.
State Pension
When you retire, the State pays you a state pension. The amount you get will depend
on how many National Insurance contributions you have paid (or, if you are a married
woman, how many contributions your husband has paid).
Statement
This is a document from the bank or building society which shows all your recent
payments into and withdrawals from your account. You should check it with your own
records.
Store cards
Store cards are like credit cards, but are available from shops rather than banks.
They can only be used to buy things at particular shops. Anything you spend on your
store card is borrowed money. If you do not pay off the full amount each month,
you will start paying interest on it.
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Take-home Pay
This is the name given to the money you actually get paid after deductions such
as income tax and National Insurance contributions.
Tax - this period
You find this on your payslip. It tells you how much income tax you have to pay
this pay period. It is worked out from tables using your tax code.
Tax code
This code tells your employer how much tax-free pay to give you each pay period.
Tax year
The tax year runs from 6 April one year to 5 April the next year. Taxes, such as
income tax, are worked out over this period.
Taxation - local
You may pay local taxes to your council. These taxes include the Council Tax which
is used to pay for local services such as libraries and the police.
Taxation - national
You are taxed in a variety of ways including:
- by paying income tax on your wages.
- by paying VAT when you buy certain goods and
- by paying the road fund licence for a car.
These taxes are used to pay for services which benefit everyone such as the National
Health Service, the armed forces and education.
Term of the loan
This refers to the time you have to pay back a loan. Generally, the longer the period
you borrow the money for, the lower the interest rate. But this will still add up
over the time that you are paying the money back.
Third-party insurance
Third-party car insurance means that your insurance company will pay out if you
accidentally cause injury to another person or damage their car. Adding in 'fire
and theft' means that your car is covered if it is stolen or damaged by fire. However,
any damage you do to your car, or injury you do to yourself, is not covered.
Total deductions
On a payslip this is the total amount that will be taken from your gross pay. What
is left after this is your take-home pay.
Transaction
This is any payment into or out of your account.
Travel insurance
When you travel abroad you may want to take out travel insurance. Many countries
will not treat you if you have an accident or fall ill unless you can pay, and medical
bills can be extremely expensive. Some travel insurance policies will cover such
events as the cost of flying you home if necessary, and giving you money for lost
luggage or cancelled flights. As with all insurance policies, it is important to
understand exactly what is covered.
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Unsecured loan
An unsecured loan means the lender relies on you to pay the money back. They do
not use anything you own as security. But, you can be taken to court and end up
having to pay back the money. Your 'credit rating' may also be affected if this
happens - this means that most financial companies will refuse to lend you money.
Utility bills
These are the bills for electricity, water, gas and phone.
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Withdraw
If you withdraw cash, you take it out of your account.
Working Families Tax Credit
The Working Families Tax Credit is a way for working parents to claim financial
support from the Government. The amount of help you can get depends on your income,
how many children you have and whether you have to pay for childcare. You can find
out more about the Working Families Tax Credit from your local Benefits Agency office,
New Deal adviser, job centre or tax enquiry office.
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Your credit history
If you have had trouble paying loans before, or if you have any court judgements
against you, this will be recorded in your credit history. If you apply for a loan,
this will be checked and you may find that if lenders are willing to lend you money,
they will charge you very high interest rates.
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We would like to thank
MINTameside
for use of this A to Z.