A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Welcome to our Tax Glossary. Here you will find clear and comprehensible definitions of most of the tax terms you will face when dealing with UK income tax. This Glossary will help you understand the tax language, however it will not offer direct solutions to your tax issues. If you need further advice on any of those tax terms - just ask a tax adviser and get a free consultation right now!

Letter: T

Tax Avoidance: Means using the tax rules to one's best advantage. If one has used a scheme or arrangement to obtain a tax advantage they are required to disclose the details to the HMRC with effect from 1st August 2004. Failure to do so will result in penalties.

Tax Code: This normally applies to employment income and is used by employers to work out the tax deducted at source from payments to employees. A tax code is made up of allowances and deductions. It is calculated by adding together allowances (e.g. personal allowance, then taking away the deductions (e.g. for a company car). This gives net allowances, which are converted into the tax code.

Tax Evasion: Means illegally reducing one's tax bill by excessive claim for expenses, understating income etc. Tax evasion is liable to criminal prosecution.

Tax on interest: Tax deducted at source from savings income at a rate of 20%. Where an individual's total taxable income for the year is below certain levels, all or part of the tax deducted from savings income is reclaimable.

Tax Year: The UK tax year runs from the 6th April to 5th April next. It is sometimes referred to as Year of Assessment.