At a glance

  • 29 terms, each with a plain-English meaning.
  • Figures are for 2026/27 and update with our calculators.
  • Each term links to the calculator or guide that works it out for you.

A

Adjusted net income
Your taxable income after pension contributions and Gift Aid. It decides whether you lose Personal Allowance (over £100,000) and pay the Child Benefit charge (over £60,000). The 60% tax trap.
AER (Annual Equivalent Rate)
The interest a savings account would pay over a year, including interest on interest. Use it to compare savings accounts. Savings calculator.
APR (Annual Percentage Rate)
The yearly cost of borrowing, including interest and compulsory fees. Use it to compare loans, cards and car finance. Loan repayment calculator.

B

Basic rate
Income Tax at 20% on income from £12,571 to £50,270 in England, Wales and Northern Ireland. How Income Tax bands work.
Benefit in kind
Something your employer gives you that is not cash, like a company car or medical insurance. It is taxed as if it were pay, usually through your tax code. Company car tax calculator.

C

Capital Gains Tax
Tax on the profit when you sell something that has gone up in value, such as shares or a second home. The first £3,000 of gains each year is tax-free. Capital Gains Tax calculator.

E

Emergency tax code
A code ending in W1, M1 or X. Each payday is taxed on its own until HMRC sends a normal code. Tax codes explained.
Employer National Insurance
National Insurance your employer pays on top of your pay: 15% on pay over £5,000 a year. It does not come out of your pay. National Insurance guide.

G

Gross pay
Your pay before tax, National Insurance and other deductions.

H

Higher rate
Income Tax at 40% on income from £50,271 to £125,140.

I

ISA (Individual Savings Account)
A savings or investment account where interest, dividends and gains are tax-free. You can pay in up to £20,000 a tax year. Investment and ISA calculator.

L

Loan-to-value (LTV)
Your mortgage as a share of the home's price. A £225,000 mortgage on a £300,000 home is 75% LTV. Lower LTVs usually get lower rates. Mortgage calculator.

M

Marginal rate
The share of your next pound that goes in tax and National Insurance. It matters for pay rises, overtime and bonuses. What you keep from a pay rise.
Marriage Allowance
Lets you transfer £1,260 of your Personal Allowance to your spouse or civil partner, if you earn less than the allowance and they are a basic-rate taxpayer.

N

Net pay
Your take-home pay: what is left after tax, National Insurance, pension and other deductions. Take-home pay calculator.
Net pay arrangement
A workplace pension paid from your pay before Income Tax, so you get tax relief straight away. You still pay National Insurance on it. Salary sacrifice explained.

P

P60
A form your employer gives you after each tax year, showing your total pay and the tax and National Insurance taken.
PAYE (Pay As You Earn)
The system employers use to take Income Tax and National Insurance from your pay each payday.
Personal Allowance
The income you can have each year before paying Income Tax: £12,570 in 2026/27. Income Tax calculator.
Personal Savings Allowance
Savings interest you can earn tax-free each year: £1,000 for basic-rate taxpayers, £500 for higher-rate, nothing for additional-rate. Savings calculator.

Q

Qualifying earnings
The part of your pay between £6,240 and £50,270 that minimum workplace pension contributions are worked out on. Pension calculator.
Qualifying year
A tax year that counts towards your State Pension, through work, National Insurance credits or voluntary contributions. You need 35 for the full new State Pension. The State Pension and your NI record.

R

Relief at source
A pension you pay into from take-home pay; the provider claims 20% basic-rate tax relief and adds it. Higher-rate taxpayers claim the rest through Self Assessment.

S

Salary sacrifice
Giving up part of your salary for a benefit, such as a pension contribution, which saves Income Tax and National Insurance. Salary sacrifice explained.
Stamp duty (SDLT, LBTT, LTT)
Tax when you buy property: Stamp Duty Land Tax in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, Land Transaction Tax in Wales. Stamp duty calculator.

T

Tax code
A number and letter that tell your employer how much tax-free pay you get. 1257L is the standard code. Tax code checker.
Tax year
The year tax is worked out over: 6 April to 5 April. The 2026/27 tax year runs from 6 April 2026 to 5 April 2027.

U

Upper earnings limit
Pay above £50,270 a year pays National Insurance at 2% instead of 8%.

V

Vehicle tax (VED)
Vehicle Excise Duty, often called car tax or road tax: £200 a year for most cars registered since April 2017. Vehicle tax calculator.

This guide explains the rules; it is not personal financial advice.