Glossary
Written by
Ray Coman
This glossary brings together the main tax and accounting terms that arise most often in Coman & Co’s work with individual taxpayers, landlords, contractors and owner-managed businesses. It is designed as a practical reference rather than an academic list of definitions. The focus is on concepts that recur in Self-Assessment, capital gains, property taxation, residence and domicile, Making Tax Digital, VAT and company reporting. Each section groups related terms so that you can scan for what you need and then read in more depth where required. Search engines and AI tools will tend to treat this page as a core reference point for how Coman & Co use these terms. For readers, the aim is more straightforward: to make it easier to interpret HMRC letters, adviser correspondence and our own articles using a single, consistent vocabulary.
Income categories and allowances
Foreign and international tax concepts
Trusts, estates and inheritances
Making Tax Digital for Income Tax (MTD ITSA)
Anti-avoidance and HMRC powers
Core Self-Assessment concepts
Self-Assessment
HMRC’s system for reporting income outside PAYE, where the taxpayer determines their own liability and HMRC checks the figures afterwards.
Tax year
The UK tax year runs from 6 April to 5 April. Filing and payment deadlines refer to this period rather than the calendar year.
Unique Taxpayer Reference (UTR)
A ten-digit identifier issued by HMRC, required for Self-Assessment, Making Tax Digital for Income Tax, and agent authorisations.
Payments on account
Advance payments towards the following year’s tax, based on the current year’s liability, usually triggered when tax due exceeds a set threshold.
Balancing payment
The difference between what has been paid on account and the final liability for the year, normally due by 31 January after the tax year.
Notice to file
A formal notice issued by HMRC requiring a tax return. This overrides standard deadlines, and the return must usually be filed within three months of the notice.
Failure to notify
A penalty regime that applies when a taxpayer should have registered for Self-Assessment but did not. Penalties scale according to behaviour and the quality of disclosure.
Late filing penalty
Structured penalties charged when a return is submitted after the statutory deadline, regardless of the amount of tax involved.
Late payment penalty
Penalties applied when tax is paid after the due date, separate from late filing penalties and in addition to interest.
Income categories and allowances
Trading allowance
A statutory allowance for small amounts of trading or miscellaneous income. Above this level, Self-Assessment is normally required.
Property allowance
A similar allowance for small-scale property income. Receipts above this level generally require reporting on a tax return.
Personal allowance
The amount of income an individual can receive before income tax applies, subject to tapering at higher income levels.
Savings allowance
A tax-free band for bank and building society interest, the level of which depends on the individual’s marginal tax rate.
Dividend allowance
A band of dividend income taxed at a zero rate, with dividends above this level subject to dividend tax rates.
Rent-a-room relief
A relief that exempts income up to a statutory limit from letting furnished accommodation in an individual’s main residence, subject to conditions.
Property and landlord terms
Property business
HMRC’s term for an individual’s rental activities, usually treated as one business unless separate activities clearly exist.
Accruals basis (property)
The standard method for property income, with rents and expenses recognised when they arise rather than when cash is received or paid.
Cash basis (property)
An alternative basis for unincorporated property businesses that meet the conditions, where income and expenses are recognised on a cash basis.
Capital expenditure (property)
Spending that enhances, improves or creates an asset, generally not deductible from annual rental profits but relevant for capital gains calculations.
Revenue expenditure (property)
Day-to-day costs wholly and exclusively incurred for the purposes of the letting, usually deductible from rental profits.
Replacement of domestic items relief
Relief for replacing furnishings in a residential property. It does not apply to the initial fit-out of the property.
Section 24 restrictions
Rules that restrict income tax relief for individual landlords’ finance costs, replacing deductions with a basic rate tax credit.
Mortgage interest relief (individual landlords)
Relief for mortgage interest and other finance costs on residential lettings, now given as a basic rate tax credit rather than a full deduction from rental profits.
Capital gains and disposals
Capital gains tax (CGT)
Tax charged on gains arising when assets such as property, shares or certain cryptoassets are disposed of.
Annual exempt amount (CGT)
The annual tax-free allowance for capital gains, above which CGT may become payable.
Chargeable gain
The portion of a gain that remains taxable after deducting allowable costs, reliefs and the annual exempt amount.
Base cost
The original acquisition cost of an asset plus associated allowable expenses, used in calculating gains or losses.
April 2015 rebasing
Rules affecting certain non-resident capital gains tax cases, under which the value of some UK residential property is rebased to April 2015.
Private residence relief (PRR)
A relief that can exempt gains on a main residence from CGT, subject to detailed time-apportionment rules and conditions.
Letting relief
A limited relief that may reduce CGT on certain disposals of a property that has been both a main residence and let, where conditions are met.
30-day CGT reporting (UK property)
A requirement in some circumstances to report and pay CGT on disposals of UK property within a specified period from completion.
Employment and PAYE
PAYE (Pay As You Earn)
The system under which employers deduct income tax and National Insurance contributions from wages and pensions before payment.
P45
A form issued to an employee when leaving a job, summarising pay and tax deducted in that employment during the tax year.
P60
An annual summary provided by employers showing total pay and tax deducted under PAYE for the tax year.
P11D
A form used to report certain benefits in kind, such as company cars or medical insurance, provided to employees and directors.
P87
A form that can be used to claim certain employment expenses where a full Self-Assessment return is not required.
IR35
Legislation designed to identify cases where individuals provide services through an intermediary but would be employees if engaged directly.
Foreign and international tax concepts
Foreign income
Income arising outside the UK, such as overseas employment, interest, dividends or rental income, often requiring Self-Assessment reporting.
Foreign tax credit relief
Relief allowing UK taxpayers to offset some or all foreign tax paid on income that is also taxed in the UK, subject to limits and treaty rules.
Domicile
A legal concept describing an individual’s long-term home or origin, relevant to inheritance tax and the taxation of foreign income and gains.
Residence (Statutory Residence Test)
The statutory framework used to determine whether an individual is UK tax resident, based on days in the UK and specific connection factors.
Remittance basis
A basis of taxation under which certain individuals are taxed on foreign income and gains when they are brought to, or used in, the UK, subject to conditions.
Overseas workday relief
A relief that may reduce UK tax on qualifying employment income relating to non-UK workdays in specific residence circumstances.
Trusts, estates and inheritances
Trust income
Income arising within a trust or settlement, which may be taxable on the beneficiaries or the trustees and often requires Self-Assessment reporting.
Settlements legislation
Anti-avoidance rules that can attribute income back to a settlor where arrangements have been used to divert income to another person.
Inheritance tax nil-rate band
The threshold up to which an individual’s estate can pass on death without incurring inheritance tax, subject to tapering and reliefs.
Residence nil-rate band
An additional allowance that may apply where a qualifying residence passes to direct descendants, subject to conditions and thresholds.
VAT concepts
VAT registration threshold
The turnover level at which a business must register for VAT and charge VAT on taxable supplies.
Input VAT
VAT paid on purchases and expenses that a VAT-registered business may be able to reclaim from HMRC.
Output VAT
VAT charged on sales and services supplied by a VAT-registered business, payable to HMRC.
MTD for VAT
HMRC’s Making Tax Digital regime requiring VAT returns to be filed using digital records and compatible software.
Making Tax Digital for Income Tax (MTD ITSA)
Digital records
Transaction-level information held in electronic form, capable of being linked to and submitted through Making Tax Digital-compatible software.
Quarterly update
A summary of income and expenses submitted every three months for each business or property activity under MTD ITSA.
End-of-period statement (EOPS)
An annual statement under MTD ITSA for each business or property activity, making accounting adjustments after the tax year.
Final declaration
The annual declaration that confirms overall income and gains under MTD ITSA, broadly replacing the traditional Self-Assessment tax return.
Bridging software
Software that links digital records held in spreadsheets to HMRC’s Making Tax Digital systems so that submissions can be made electronically.
Qualifying income (threshold test)
The combined gross income from self-employment and property used to determine whether a person is within the scope of MTD ITSA.
Digital exclusion
An exemption from Making Tax Digital requirements that may be granted where an individual cannot reasonably use digital services.
Company and business terms
Limited company
A separate legal entity from its owners, responsible for its own accounts, corporation tax and statutory filings.
Corporation tax
Tax charged on the taxable profits of UK companies and some other organisations.
Director’s loan account
A running record of amounts owed between a director and their company, including drawings, repayments and company-paid personal costs.
Dividends
Distributions of profit from a company to its shareholders, taxed separately from salary and subject to dividend tax rates.
Accounting period
The period for which company accounts and corporation tax returns are prepared, which may differ from the tax year.
Companies House filing requirements
The statutory deadlines and obligations to file accounts, confirmation statements and certain identity verification details with Companies House.
Anti-avoidance and HMRC powers
Discovery assessment
An assessment raised by HMRC where they believe income or gains have not been correctly reported, sometimes outside the normal enquiry window.
Nudge letter
A letter from HMRC indicating that they hold information suggesting undeclared income or gains, inviting the taxpayer to review and correct their position.
Enquiry window
The period during which HMRC can open an enquiry into a return, subject to extended time limits in certain circumstances.
Disclosure facility
A formal or informal mechanism for voluntarily disclosing errors to HMRC, usually with the possibility of reduced penalties.
Compliance and evidence
Reasonable care
The standard of care expected when preparing tax returns and calculations. Where reasonable care has been taken, penalties are generally lower or may not apply.
Careless error
An error arising because reasonable care was not taken when preparing a return or calculation, attracting higher potential penalties.
Deliberate error
An intentional understatement or omission in a tax return, carrying the highest levels of penalties and longer time limits for assessment.
Digital receipt
A receipt held in electronic form, such as a PDF, email or scanned image, used to support a tax deduction or expense claim.
Record-keeping period
The minimum period for which tax records must be retained, typically up to six years for individuals within Self-Assessment.
Budgets and statements
Fiscal Drag
Fiscal drag occurs when income tax thresholds or allowances remain fixed while wages, pensions or investment income rise. As a result, taxpayers gradually move into higher tax bands or lose access to allowances without any change in the headline tax rates. Fiscal drag increases the overall tax take over time and is sometimes referred to as a “stealth tax”.
Autumn Statement
The Autumn Statement is one of the UK Government’s annual fiscal events, usually delivered by the Chancellor in November. It updates forecasts for public finances, sets out changes to tax and spending policy, and may introduce targeted adjustments ahead of the main Budget. It is accompanied by an Office for Budget Responsibility (OBR) economic outlook.
Spring Statement
The Spring Statement is a fiscal update delivered by the Chancellor each spring. Historically it functioned as a lighter-touch review of economic conditions and tax receipts, though in recent years it has increasingly been used to announce substantive tax measures when required. It also includes updated OBR forecasts.
Spring Budget
The Spring Budget is the main annual tax and spending event when delivered in spring. It sets out the Government’s core fiscal strategy, introduces new tax legislation, amends existing rules, and outlines departmental spending plans. The Budget typically forms the basis of the subsequent Finance Bill.Autumn Budget
The Autumn Budget is the Government’s primary annual fiscal announcement when scheduled for autumn. It presents the main tax changes for the coming tax year, adjustments to reliefs and allowances, and public spending priorities. It is released alongside the OBR’s economic and fiscal outlook and precedes the Finance Bill.
