jargon buster

Have you ever come across a term that just sounds like it’s made up or in another language? Don’t worry; been there, done that and
got the t-shirt.

We’ve put together a list of some of the most common accounting related terms that have people scratching their heads so you can become a pro financial translator in no time.

We’ve broken them down into categories for you so they’re in nice, digestible sized chunks.

what are we?

Accounts and Reporting

Term	What it Means (plain English)
Accounts	A tidy summary of your business’s money situation — what came in, what went out, and what’s left.
Trial Balance	A list of all your accounting balances — like a halfway checkpoint before the final accounts.
Accruals	Costs you've incurred but haven’t been invoiced for yet — money you owe but isn't on paper yet
Prepayments	The opposite of an accrual — money you’ve paid upfront for something you'll use later (e.g. insurance).
Depreciation	How the value of something big (like a van or a laptop) is spread over time in your accounts.
Gross vs Net	Gross = before tax. Net = after tax. One looks better, the other is what lands in your bank.

Self-Employed and Personal Tax

Term	What it Means (plain English)
Self-Assessment	The yearly form where you tell HMRC what you earned and what tax you owe, or don't owe.
Personal Allowance	The bit of income you don’t pay tax on — everyone gets one, and it resets each tax year.
Allowable Expenses	Business costs you can claim to reduce your tax — like travel, software, or bits you use for work.
Disallowable Expenses	Costs HMRC won’t let you claim — like client entertaining, fines, or anything that’s a bit too personal.
Capital Gains Tax (CGT)	Tax on the profit when you sell something valuable — like a second property or shares.
Making Tax Digital (MTD)	HMRC’s plan to get everyone keeping records and filing taxes online — no more carrier bags full of receipts.

Limited Companies

Term	What it Means (plain English)
Corporation Tax	The tax your company pays on its profits — not to be confused with your personal tax bill.
CT600	HMRC’s name for the company tax return — the form that shows how much Corporation Tax your company owes.
Dividends	Money you take out of your company as a shareholder — after profit and tax. Think of it as your slice of the pie.
Director’s Loan Account (DLA)	A running tally of what you’ve put into or taken out of the company — kind of like an IOU with your business.
Confirmation Statement	A once-a-year update to Companies House that confirms your company details are still correct.

VAT

Term	What it Means (plain English)
VAT	A tax added to most things you buy or sell as a business — we handle the fiddly parts so you don’t have to.
Flat Rate Scheme	A simplified VAT setup for small businesses — you charge VAT as normal, but pay HMRC a set percentage.
VAT Return	The form that tells HMRC how much VAT you’ve charged, how much you’ve paid, and what you owe or can reclaim.
Input VAT	VAT you’ve paid on business purchases — usually claimable if you're VAT-registered.
Output VAT	VAT you’ve charged on your sales — this is what you hand over to HMRC.

Payroll and Employment

Term	What it Means (plain English)
PAYE	“Pay As You Earn” — how tax and National Insurance get taken off wages before they land in someone’s bank account.
P11D	The form for reporting perks and benefits — like a company car or private health cover.
P60	The end-of-year summary that shows your total pay and tax — most people get this by the end of April.
P45	The form you get when you leave a job — it tells your new employer how much tax you’ve already paid.
National Insurance (NI)	Another tax on your income — it goes towards things like the NHS, state pension and other public services.

Property and Landlords

Term	What it Means (plain English)
Stamp Duty Land Tax (SDLT)	A tax you pay when buying property in England or Northern Ireland. How much depends on what you’re buying and what it’s worth. It’s often a surprise — we make sure it’s not.
Buy-to-Let	Buying a property to rent out — not the same as your main home. Comes with its own tax rules (and a few traps if you’re not careful).
Furnished Holiday Let (FHL)	A rental property that qualifies for special tax treatment — but only if it meets strict conditions. It’s not just a holiday home with a nice view.
Rental Income	Money you earn from letting out a property. It gets taxed, but you can usually claim certain expenses against it — we help you figure out what’s allowed.
Mortgage Interest Relief	Used to be a full deduction, now it’s a basic rate tax credit. Translation: it’s not as generous as it once was — but you may still get some relief.
Wear and Tear Allowance	This used to give landlords a flat-rate deduction for furnishings. It’s gone now — you can only claim when you replace something like-for-like.

Gifting

Term	What it Means (plain English)
Making Gifts	Giving away money, property or possessions — sounds simple, but HMRC might still want to hear about it if it’s over a certain amount or done too close to your death.
Gift Exemption	You can give away up to £3,000 a year tax-free — and there are a few other exemptions for things like weddings and regular payments out of income. Anything outside that might be taxable later.
Potentially Exempt Transfer (PET)	A gift that might avoid Inheritance Tax if you live for seven years after giving it. (Yes, really.) Drop out early, and it might still count.
Taper Relief	If you die between 3 and 7 years after giving a gift, the Inheritance Tax charge may be reduced — the longer you live, the less tax applies. So, eat your greens.

Inheritance and Estates

Term	What it Means (plain English)
Inheritance Tax (IHT)	Tax on the value of someone’s estate when they die — above a certain threshold. Planning ahead can make a big difference to how much the taxman takes.
Estate	Everything someone owns when they pass away — property, money, belongings, even that collection of rare vinyls. It all counts.
Nil-Rate Band	The tax-free bit of your estate. Currently £325,000 for most people — anything above that might be taxed at 40%.
Residence Nil-Rate Band (RNRB)	An extra bit of tax-free allowance if you leave your home to your kids or grandkids. Often missed, but can make a big difference.
Probate	The legal bit that gives someone permission to deal with your estate when you die. It’s paperwork-heavy — we help take the sting out of it.
Executor	The person in charge of carrying out your will and sorting your estate. It can be a big job — we often support executors through the process.

Jargon Buster