UK money glossary — A to Z.

A legally binding refusal of specified medical treatments, made in advance under the Mental Capacity Act 2005 in case you later lose capacity. Often called a 'living will'.

The interest rate on a savings account as if interest were paid and compounded once a year — used to compare accounts on a like-for-like basis.

An insurance product that converts a pension pot into a guaranteed income for life or for a fixed term.

The total annual cost of borrowing, including interest and standard fees, expressed as a percentage.

Anything you own that has financial value — cash, property, investments, pensions, vehicles, valuables.

A non-means-tested benefit for people over State Pension age who need help with personal care or supervision due to illness or disability.

The witnessing clause at the end of a UK will, recording that the s9 Wills Act 1837 formalities have been observed — testator signed in joint presence of two adult witnesses, who then signed in the testator's presence.

The rule requiring UK employers to automatically enrol qualifying workers aged 22 to State Pension age, earning over £10,000, into a workplace pension.

A large optional final payment on a PCP car-finance deal that you pay only if you want to keep the car at the end of the agreement.

The interest rate set by the Bank of England's Monetary Policy Committee. It is the rate the Bank pays to commercial banks holding reserves with it.

Someone who inherits from a will, receives the proceeds of a life insurance policy or pension, or benefits from a trust.

Short-term interest-free credit that splits a purchase into instalments. Providers include Klarna, Clearpay and PayPal.

A loan to a government or company that pays a fixed rate of interest (the coupon) and returns the principal at maturity.

Tax on the profit when you sell an asset (shares, second home, business) that has risen in value, above the annual exempt amount.

An ISA that holds cash savings. Interest is tax-free; contributions count towards the £20,000 annual ISA allowance.

The seven-working-day bank-account switching service run by Pay.UK, with a guarantee covering any errors.

A court order in England, Wales or Northern Ireland stating that you owe a debt — recorded on your credit file for six years from the judgment date.

A short amendment to an existing will. Must satisfy the same Wills Act 1837 s9 formalities — written, signed and witnessed by two adults — to be valid.

Interest earned on both the original sum and previously accumulated interest — the engine behind long-term investing.

An FCA standard requiring regulated financial firms to act to deliver good outcomes for retail customers.

A local tax in England, Wales and Scotland based on the band your home was placed in. Northern Ireland uses domestic rates instead.

A digital token such as a cryptocurrency, stablecoin or NFT. HMRC treats most cryptoassets as property, not currency, so they can be subject to Capital Gains Tax or Income Tax.

A formal notice from a lender that an account has broken down — typically after 3–6 months of missed payments. Stays on your credit file for six years from the default date.

A local-authority test under the Care Act 2014: was avoiding the care charge a 'significant motivation' for disposing of an asset, and could the person reasonably have foreseen needing care?

Rules requiring online platforms such as Vinted, eBay and Airbnb to report higher-volume sellers' income to HMRC each year — based on the OECD model and in force since January 2024.

A bank instruction that lets a company pull variable amounts from your account on agreed dates, protected by the Direct Debit Guarantee.

A now-banned car-finance practice where the dealer could set your interest rate and earned more commission the higher the rate — usually without telling you.

The amount of dividend income each tax year that is taxed at 0%. £500 from April 2024, reduced from £1,000 the year before.

Taking flexible income from a defined-contribution pension while the remainder stays invested.

Ofgem's quarterly cap on the unit rate and standing charge default-tariff suppliers can charge for gas and electricity in England, Wales and Scotland.

A way for over-55s to take cash out of their home, usually as a lifetime mortgage. The loan plus rolled-up interest is repaid when the home is sold (typically on death or moving into care).

The amount you pay towards a claim before the insurer pays the rest. Usually a fixed pound amount per claim.

The person named in a will who is responsible for administering the estate after death — collecting assets, paying debts and Inheritance Tax, and distributing what's left.

The UK's near-real-time bank transfer system — most transfers up to £1,000,000 settle within minutes, 24/7.

The UK regulator for financial services firms and financial markets. Sets and enforces conduct rules and authorises firms to operate.

A mortgage where the interest rate is locked for a set period (typically 2, 5 or 10 years) regardless of changes in Bank Rate.

The free, independent UK service that resolves disputes between consumers and financial firms. Decisions are binding on the firm if you accept them.

Protects deposits up to £85,000 per person per authorised bank, building society or credit union — and up to £85,000 for most investments and pensions.

An HMRC scheme that lets registered charities reclaim 25p of basic-rate tax for every £1 you donate, at no extra cost to you.

A bond issued by the UK government. Coupon income is taxable as savings interest; capital gains on gilts are exempt from Capital Gains Tax.

A tax charge that claws back Child Benefit when one partner's adjusted net income exceeds £60,000, with full clawback at £80,000.

The UK government department responsible for collecting taxes, paying tax credits and Child Benefit, and policing the minimum wage.

A tax payable on an estate worth more than the £325,000 nil-rate band on death, with extra allowances for passing on a main residence and unused spousal bands.

Insurance that replaces part of your income (usually 50–70%) if you cannot work due to illness or injury, until you can return to work, retire, or the policy term ends.

An investment fund (mutual fund or ETF) that tracks a market index such as the FTSE All-Share or MSCI World, instead of trying to beat the market.

Dying without a valid will. The intestacy rules — not the deceased — decide who inherits.

The UK tax rule that determines whether a contractor working through their own limited company should be taxed like an employee.

A tax-free wrapper for cash, investments or a mix. Interest, dividends and capital gains inside an ISA are not taxed.

The maximum you can pay into your adult ISAs each tax year — £20,000 for 2026/27.

A tax-free savings or investment account for under-18s, with an annual allowance of £9,000 across cash and stocks & shares combined.

Scotland's version of Stamp Duty, charged on property purchases. Bands and rates are set by the Scottish Government.

A non-binding document sitting alongside the will that gives executors and trustees guidance — for example which child gets a keepsake or how to use a discretionary trust.

A tax-free savings account for 18–39-year-olds, paying a 25% government bonus on contributions of up to £4,000 a year (so up to £1,000 bonus).

Wales' version of Stamp Duty, charged on Welsh property purchases. Bands and rates are set by the Welsh Government and administered by the WRA.

The size of a mortgage as a percentage of the property's value. Lower LTV usually means access to cheaper interest rates.

The total tax-free cash anyone can take from all their pensions combined — £268,275 from 6 April 2024, when the Lifetime Allowance was abolished.

Lets a married or civil-partner couple transfer up to £1,260 of unused Personal Allowance from a non-taxpayer to a basic-rate partner — worth up to £252 a year.

A reduced pension annual allowance of £10,000 that applies once you have flexibly accessed a defined-contribution pension.

HMRC's programme requiring digital record-keeping and quarterly updates for VAT (already in force) and Income Tax Self Assessment (phased from April 2026).

A UK tax that funds the State Pension and certain benefits. Class 1 is paid by employees (8%/2%); Class 4 by the self-employed (6%/2%); Class 2 is effectively voluntary since April 2024.

The £325,000 per-person Inheritance Tax allowance, frozen until April 2030. Estates within this amount pay no IHT.

The government-backed savings provider. 100% of money held with NS&I is HM-Treasury-backed, beyond the £85,000 FSCS limit.

The UK regulator for telecoms, broadcast, postal services and online safety. Sets rules on broadband, mobile, TV and radio.

A mortgage linked to a savings account where your savings balance reduces the interest charged on the loan, instead of earning interest itself.

The UK regulator for gas and electricity markets in Great Britain. Sets the quarterly energy price cap for default tariffs.

Regulated, secure data and payment access between UK banks and authorised third parties, based on the EU PSD2 directive and overseen by the OBIE.

An arranged borrowing facility linked to a current account. Authorised overdrafts must be priced as a single APR since April 2020.

The tax-free lump sum you can usually take when crystallising a defined-contribution pension — generally 25% of the pot, subject to the Lump Sum Allowance.

A car-finance agreement where you pay a deposit and lower monthly instalments, with a balloon (Guaranteed Future Value) payment to own the car at the end.

The amount of income you can earn before paying Income Tax — £12,570 for 2026/27, frozen until April 2028.

A non-means-tested benefit for adults under State Pension age with a long-term disability or health condition, paid in two components: daily living and mobility.

An outright lifetime gift to an individual that leaves your estate immediately, becomes fully exempt after 7 years, and is taxable if you die within that time.

An NS&I savings product where each £1 bond is entered into a monthly tax-free prize draw instead of paying interest. Maximum holding £50,000.

The CGT relief that exempts the gain on selling your only or main home — provided you have lived in it as your main residence throughout ownership.

A tax-free allowance for savings interest — £1,000 for basic-rate taxpayers, £500 for higher-rate, £0 for additional-rate.

A listed company that invests in property and pays out most of its rental income as dividends. UK REITs are largely tax-exempt at the company level.

Switching your mortgage to a new deal with the same or a different lender — usually when your current fix or tracker is about to end.

Lets you earn up to £7,500 a year tax-free from letting furnished accommodation in the home you live in.

An extra £175,000 Inheritance Tax allowance when you leave a qualifying home to direct descendants. Tapers away £1 for every £2 over a £2 million estate.

What's left of the estate after specific legacies, debts, taxes and costs have been paid. The residuary beneficiary inherits whatever is in the residue.

England and Northern Ireland's tax on property purchases. Scotland uses LBTT and Wales uses LTT instead.

A consumer-credit protection that makes the credit card issuer jointly liable with the retailer for purchases between £100 and £30,000 paid for (even partly) by credit card.

HMRC's system for collecting Income Tax from people whose tax cannot be fully collected through PAYE — including the self-employed, landlords, and high earners.

Converting a joint tenancy into a tenancy in common. After severance, each owner's share passes under their will or intestacy instead of automatically to the survivor.

A personal pension that lets you choose your own investments — funds, shares, ETFs, gilts, commercial property — within HMRC's rules.

An instruction to your bank to send a fixed amount on a regular schedule to another account. You control the amount and timing.

Up to £5,000 of savings interest is taxed at 0% — but the band is reduced by £1 for every £1 of non-savings income above the £12,570 Personal Allowance.

The weekly pension paid by the government from State Pension age, based on your National Insurance record. Full new State Pension is £230.25 a week in 2025/26 (uprated each April).

Reduces the £60,000 pension annual allowance for very high earners, by £1 for every £2 of adjusted income over £260,000, down to a £10,000 minimum.

The code on your payslip that tells your employer how much tax-free allowance to apply each pay period. The standard 2026/27 code is 1257L.

The person making a will (testatrix if female, historically). To be a valid testator you must be 18+ and have testamentary capacity.

A £1,000 tax-free allowance for casual self-employed or side-hustle income — no need to declare or register with HMRC below this.

A legal arrangement separating who owns an asset (trustees) from who benefits from it (beneficiaries). Used to protect children, vulnerable adults and family wealth.

London's daily charge (£12.50) for driving non-compliant vehicles inside the zone, expanded to cover all London boroughs from August 2023.

A means-tested benefit for working-age people on low income or out of work. Replaces six legacy benefits including Housing Benefit and tax credits.

A mortgage where the interest rate can change at the lender's discretion (SVR) or in line with an external rate (tracker).

A consumption tax charged at three main rates: standard 20%, reduced 5%, zero-rated 0%. Some items are exempt entirely.

Your legal right under the Consumer Credit Act to end a PCP or HP car-finance agreement early once you have paid at least half the total amount payable.

An annual tax-free payment to help with heating costs over winter, paid to those over State Pension age. Means-tested from 2024/25 — limited to recipients of Pension Credit and certain other benefits.