Money & Tax Jargon Buster

CGT (Capital Gains Tax)

A tax charged on profits from the disposal of assets, unless the disposal is in the course of trade when the profit will be taxed as income.

Creditor

Someone who is owed money by another. A secured creditor is one who has a Secured Loan.

Debtor

Someone who owes money to another person.

Endowment policy

A policy of assurance on the life of a person which pays a sum assured on that person' death or, if earlier, on a date specified in the policy. A With Profits Endowment Policy will pay Bonuses in addition to the sum assured and it is this type of policy that has often been used to secure repayment of personal mortgages; if the bonuses fall short of expectations, the policy monies may be insufficient to repay the mortgage.

IHT (Inheritance Tax)

Inheritance tax, charged upon a deceased's estate and on gifts which fall outside the exemption limits.

Interest only mortgage

A mortgage under which the borrower only pays interest during the mortgage term and the whole of the capital is repaid at the end.

ISA

Individual Savings Account. Provided that certain rules are observed, these accounts enjoy tax benefits.

ISA mortgage

This resembles an Endowment Mortgage, but the saving scheme is an ISA and the contributions are restricted.

Net wages

The pay received by an employee after all employer's deductions, such as tax and national insurance, have been subtracted.

Payment in advance

Payment of a regular sum, like rent or salary, at the beginning of the period to which it relates.

Payment in arrears

Payment of a regular sum, like rent or salary, at the end of the period to which it relates.

Secured debt, secured loan

Any debt that has been secured by charging an asset for its repayment. In default, the lender can repossess the security, sell it on the open market and apply the proceeds to repaying the debt, but the lender will generally have to seek the court's approval first.

Unsecured debt, unsecured loan

A debt for which no security has been given by the borrower to the lender.

Warrant of execution

A formal instruction to the bailiff to enforce a judgment by seizing the debtor's goods.

Year

Generally, any period of twelve months commencing on the relevant start date but it can be (1) Accounting (or financial) year - the period covered by the accounts of a company or other body. (2) Calendar year - twelve months ending on 31 December. (3) Fiscal year - the tax year ending on 5 April. However, rates and Council tax are based on a year ending 31 March.