Money jargon puts a lot of people off sorting out their finances. This UK money glossary explains the terms you will come across on Iceburg Wealth and elsewhere, in plain English and with the latest figures for 2026/27.
Each entry links to a full guide where we have one, so you can dig deeper into anything that matters to you. Bookmark this UK money glossary and come back whenever a term trips you up.
A
Additional rate
The top band of income tax in England, Wales and Northern Ireland. You pay 45% on income over £125,140.
Adjusted net income
Your total taxable income minus certain reliefs, such as pension contributions and Gift Aid. It decides whether you lose your personal allowance or pay the High Income Child Benefit Charge.
AER (Annual Equivalent Rate)
The interest you would earn on savings over a year, including the effect of compounding. Use it to compare savings accounts. How interest rates work.
Annual allowance
The most you can pay into pensions each year with tax relief. For most people it is £60,000, or 100% of your earnings if that is lower.
Annuity
A product you buy with your pension that pays a guaranteed income, usually for life. Annuities explained.
APR (Annual Percentage Rate)
The yearly cost of borrowing, including interest and most fees. Use it to compare loans and credit cards.
Asset allocation
How you split your money between different types of investment, such as shares, bonds, property and cash.
Auto enrolment
The law that makes employers put eligible staff into a workplace pension. It applies if you are 22 or over, under State Pension age and earn more than £10,000 a year. What is a pension.
B
Bank Rate
The main interest rate set by the Bank of England. It affects the rates banks charge on mortgages and loans and pay on savings. Interest rates explained.
Basic rate
The 20% band of income tax, which applies to income between £12,571 and £50,270 in England, Wales and Northern Ireland.
Bed and ISA
Selling investments held outside an ISA and buying them back inside one, so future growth is sheltered from tax. The Bed and ISA strategy.
Bond
A loan you make to a government or company in return for regular interest. UK government bonds are called gilts.
Buy to let
Buying a property to rent out to tenants. Is buy to let still worth it.
Buy borrow die
A wealth strategy where people borrow against their assets instead of selling them. How the strategy works.
C
Capital gains tax (CGT)
Tax on the profit when you sell an asset that has gone up in value. The first £3,000 of gains each year is tax free, then you pay 18% within the basic rate band and 24% above it. CGT on property.
Cash ISA
An ISA that holds cash savings, with interest free of tax. From April 2027, savers under 65 can only put £12,000 a year into cash ISAs.
Compound interest
Interest earned on your original money plus the interest it has already earned. Over time it makes savings and investments grow faster. How compound interest works.
Corporation tax
Tax a limited company pays on its profits. It is 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief in between.
CPI (Consumer Prices Index)
The official measure of UK inflation, published monthly by the ONS.
Credit score
A rating lenders use to judge how likely you are to repay borrowing. How to fix a bad credit score.
D
Defined benefit pension
A pension that promises a set income based on your salary and years of service. Often called a final salary scheme.
Defined contribution pension
A pension where your income depends on how much goes in and how the investments perform. Most workplace pensions today work this way.
Dividend
A share of a company’s profits paid to its shareholders. Dividend growth investing.
Dividend allowance
The first £500 of dividends you receive each year outside an ISA or pension is tax free. Above that, you pay 10.75%, 35.75% or 39.35% depending on your tax band.
Dividend cover
Earnings per share divided by dividend per share. It shows how comfortably a company can afford its dividend.
Drawdown
Taking an income from your pension while the rest stays invested.
E
Emergency fund
Cash set aside for unexpected costs, usually three to six months of essential spending. How to build one.
Employer pension contributions
The money your employer pays into your workplace pension on top of what you pay. Get the most from them.
ETF (Exchange Traded Fund)
A fund that trades on the stock market like a share and often tracks an index.
F
FCA (Financial Conduct Authority)
The UK regulator for financial firms and advisers. You can check a firm on the FCA Register.
FIRE
Short for Financial Independence, Retire Early. A movement focused on saving and investing hard to stop working sooner. FIRE in the UK.
Fixed rate mortgage
A mortgage where the interest rate stays the same for a set period, often two or five years.
Fractional shares
Buying part of a single share, so you can invest in expensive companies with small amounts. Fractional shares explained.
Freehold
Owning a property and the land it stands on outright, with no time limit. Leasehold vs freehold.
FSCS
The Financial Services Compensation Scheme. It protects up to £120,000 per person, per banking group, if a UK bank or building society fails.
G
General investment account (GIA)
An investment account with no tax wrapper. Gains and dividends may be taxed.
Gilts
Bonds issued by the UK government.
H
High Income Child Benefit Charge
A tax charge if you or your partner have adjusted net income over £60,000 and claim Child Benefit. Above £80,000, you repay all of it.
Higher rate
The 40% band of income tax, which applies to income between £50,271 and £125,140 in England, Wales and Northern Ireland.
HMRC
HM Revenue and Customs, the government department that collects UK taxes.
I
Index fund
A low cost fund that tracks a market index such as the FTSE 100. Build a simple index fund portfolio.
Inflation
The rate at which prices rise over time, which reduces what your money can buy. How inflation drains your savings.
Inheritance tax (IHT)
Tax on an estate when someone dies. It is usually 40% on the value above the £325,000 nil rate band. The 7 year rule.
ISA (Individual Savings Account)
A tax free wrapper for savings and investments. You can pay in up to £20,000 each tax year. Types of ISA.
L
Leasehold
Owning a property for a fixed number of years on a lease, without owning the land. Leasehold vs freehold.
Lifetime ISA (LISA)
An ISA for people aged 18 to 39 to save for a first home up to £450,000 or for retirement. You can pay in £4,000 a year and the government adds a 25% bonus. The government plans to replace it with a new first time buyer ISA, expected around April 2028.
Limited company
A business that is a separate legal entity from its owners. Is a limited company worth it.
Loan to value (LTV)
The size of your mortgage as a percentage of the property’s value. A lower LTV usually means a cheaper rate.
Lump sum allowance
The cap on tax free cash you can take from your pensions. For most people it is £268,275.
M
Making Tax Digital
HMRC’s move to digital tax records. From April 2026, sole traders and landlords with income over £50,000 must keep digital records and send quarterly updates. Side hustles and tax.
Marriage Allowance
Lets a lower earning spouse or civil partner transfer £1,260 of their personal allowance to their partner.
Minimum pension age
The earliest age you can usually access a private pension. It is 55, rising to 57 from April 2028.
N
National Insurance
A tax on earnings that builds your entitlement to the State Pension and some benefits.
Net yield
Rental income minus running costs, shown as a percentage of the property’s value.
Nil rate band
The amount of an estate that is free of inheritance tax. It is £325,000 and frozen until 2031. Inheritance tax and children.
P
PAYE
Pay As You Earn, the system employers use to take income tax and National Insurance from wages.
Personal allowance
The income you can earn each year before paying income tax, currently £12,570. You lose £1 of it for every £2 of income over £100,000.
Personal Savings Allowance
The savings interest you can earn tax free each year: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nothing for additional rate taxpayers.
Premium Bonds
Savings from NS&I where instead of interest you are entered into a monthly prize draw. Are Premium Bonds worth it.
Private equity
Investment in companies that are not listed on a stock exchange. Private equity explained.
Q
QROPS
A Qualifying Recognised Overseas Pension Scheme, used to move a UK pension abroad. Your UK pension abroad.
R
REIT
A Real Estate Investment Trust, a listed company that owns property and pays out most of its rental profits. REITs vs direct property.
Remortgage
Switching your mortgage to a new deal, either with your current lender or a new one. How to remortgage.
Rent a Room scheme
Lets you earn up to £7,500 a year tax free by letting a furnished room in your own home.
Rental yield
Annual rent as a percentage of a property’s value. Gross yield ignores costs, while net yield takes them off.
Residence nil rate band
An extra £175,000 inheritance tax allowance when you leave your home to children or grandchildren.
S
Salary sacrifice
Giving up part of your salary in exchange for an employer pension contribution, saving tax and National Insurance. Salary sacrifice explained.
Section 24
The rule that stops individual landlords deducting mortgage interest from rental income. Instead, they get a 20% tax credit. Buy to let through a limited company.
Self Assessment
The system for reporting income HMRC has not already taxed. The online deadline is 31 January after the end of the tax year.
SIPP
A Self Invested Personal Pension, where you choose your own investments. What is a SIPP.
Stamp Duty Land Tax
Tax on buying property in England and Northern Ireland. Scotland and Wales have their own versions.
State Pension
The pension paid by the government once you reach State Pension age. The full new State Pension is £241.30 a week for 2026/27. How many NI years you need.
State Pension age
The age you can claim the State Pension. It is rising from 66 to 67 between April 2026 and April 2028.
Stocks and shares ISA
An ISA that holds investments, with growth and dividends free of UK tax.
T
Tax code
The code your employer uses to work out your income tax. Most people with one job are on 1257L.
Tax year
The UK tax year runs from 6 April to 5 April the following year.
Tracker mortgage
A mortgage whose rate moves with Bank Rate, plus a set margin.
Trading allowance
The first £1,000 of income from self employment or a side hustle each year is tax free. Side hustles UK.
Trust
A legal arrangement where trustees look after assets for someone else. How trusts work.
U
Universal Credit
A means tested benefit for people on a low income or out of work. What you can claim.
V
VAT
Value Added Tax, charged at 20% on most goods and services. Businesses must register once their taxable turnover passes £90,000.
Volatility
How much an investment’s price moves up and down over time.
W
Wealth tax
A tax on total wealth rather than income. The UK does not currently have one. Wealth tax explained.
Will
A legal document setting out who gets your money and possessions when you die. What happens without a will.
Y
Yield
The income an investment pays as a percentage of its price. What is yield on cost.
Can’t Find a Term in Our UK Money Glossary?
We add new terms to this UK money glossary regularly. For the official rules on any tax or benefit, GOV.UK is always the best place to check.
This glossary is for general information only and is not financial advice. Figures are for the 2026/27 tax year and can change.