Financial Glossary
Clear, jargon-free definitions of financial terms you will encounter during divorce, bereavement, or while running your own business.
34 terms
Allowable Expenses
Business costs you can deduct from your income to reduce your tax bill. Must be wholly and exclusively for business purposes.
Bereavement Support Payment
A benefit for people whose spouse or civil partner has died. Includes a lump sum and monthly payments for 18 months. Must be under State Pension age to claim.
Business Asset Disposal Relief
A tax relief (formerly Entrepreneurs' Relief) that reduces Capital Gains Tax to 10% when selling qualifying business assets, up to a £1 million lifetime limit.
CETV (Cash Equivalent Transfer Value)
The value placed on a pension for transfer purposes. For divorce, this is used to determine how much a pension is worth when dividing assets.
Clean Break Order
A court order that ends all financial ties between divorcing spouses. Once in place, neither can make future claims against the other.
Consent Order
A legally binding document that makes your financial agreement part of the divorce. Without it, your ex-spouse could potentially make claims in the future.
Dividend
A payment from company profits to shareholders. For limited company directors, often a tax-efficient way to take money from the business alongside a salary.
Executor
The person named in a will to carry out its instructions. They apply for probate, collect assets, pay debts, and distribute the estate to beneficiaries.
Grant of Probate
The official document that gives executors the legal authority to deal with a deceased person's estate when there is a will.
HMRC (HM Revenue & Customs)
The UK government department responsible for collecting taxes and paying some state benefits. You deal with them for income tax, National Insurance, and self-assessment.
Inheritance Tax
Tax paid on the estate of someone who has died. Currently 40% on assets over £325,000, with additional reliefs available for property passing to direct descendants.
Intestacy
When someone dies without a valid will. The estate is distributed according to strict legal rules, which may not reflect what the person would have wanted.
Letters of Administration
Similar to Grant of Probate, but issued when someone dies without a will (intestate). Gives the administrator authority to deal with the estate.
Limited Company
A business structure that's legally separate from its owners. Provides liability protection but has more admin requirements and different tax treatment.
LPA (Lasting Power of Attorney)
A legal document that lets you appoint someone to make decisions on your behalf if you lose mental capacity. There are two types: one for finances and one for health.
Maternity Allowance
A benefit for self-employed women and those who don't qualify for Statutory Maternity Pay. Currently up to £184.03 per week for 39 weeks.
Matrimonial Assets
Assets that can be divided in a divorce, typically including property, pensions, savings, and investments acquired during the marriage.
Mesher Order
A type of divorce order that delays the sale of the family home until a trigger event, such as the youngest child reaching 18 or finishing education.
National Insurance
Contributions taken from your earnings that go towards your State Pension and other benefits. Self-employed people pay Class 2 and Class 4 National Insurance.
Payment on Account
Advance payments towards your next tax bill, based on your previous year's liability. Usually 50% in January and 50% in July.
Pension Sharing Order
A court order that transfers a percentage of one person's pension to their ex-spouse as part of a divorce settlement. The recipient gets their own separate pension pot.
Probate
The legal process of dealing with someone's estate after they die. It involves proving the will is valid, valuing the estate, paying debts, and distributing assets to beneficiaries.
Self-Assessment
The system used to collect Income Tax from people who are self-employed or have other income not taxed at source. You report your income and calculate tax owed.
SIPP (Self-Invested Personal Pension)
A type of personal pension that gives you more control over your investments. Popular with self-employed people who want flexibility in how their pension money is invested.
Sole Trader
The simplest business structure. You and your business are legally the same, meaning you're personally responsible for business debts but keep all profits.
Tax Code
A code used by HMRC to tell your employer how much tax to deduct from your pay. The most common code is 1257L, meaning you can earn £12,570 tax-free.
Tax-Free Childcare
A government scheme that tops up money you pay for childcare. For every £8 you pay in, the government adds £2, up to £2,000 per child per year.
UTR (Unique Taxpayer Reference)
A 10-digit number given to you by HMRC when you register for Self Assessment. You need it to file tax returns and access some government services.
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