Gift A gift is a transfer of goods or property which is free of charge.
Gilt-edged securities These are first-class securities such as government stocks or local authority stocks.
Gross domestic product This is the value of goods and services produced by an economy over a particular time period.
Gross interest This is interest which has not had any income tax taken out of it.
Gross profit Gross profit is the difference between the selling price of goods and what they cost to buy.
Ground rent A ground rent is a rent created by a long-term lease of land.
Guarantee A guarantee is sometimes needed before a bank will lend money to a customer. Another person (the guarantor) pledges to the bank, in writing, that if the customer does not repay the debt then the guarantor will.
Guaranteed minimum pension This is the lowest level of pension which must be paid to a pensioner, as a condition of contracting out of SERPS.
Headline rate This term refers to information which is easy to publish but which may be over-simplified and, as a result, possibly inaccurate.
Hire purchase This is a form of credit which allows the purchaser to have possession of the goods shown in the hire purchase agreement. Ownership passes to the purchaser when they have paid all the instalments and any fee.
Holding company This is a company which controls another company, usually by owning more than half of its shares.
Hypothecation This happens when a person gives a bank authority to sell goods which have been pledged as security for a loan.
Incapacity benefit Incapacity benefit is paid to people who are too ill to work.
Income and expenditure account This account records an organisation's income and spending and shows the surplus or shortfall.
Income drawdown Under this system, people with personal pensions can take money from their personal pension fund instead of using the fund to buy an annuity.
Income tax You pay this tax according to how much income you have under various categories.
Income unit This is a unit trust which pays out the income it earns to the investors, instead of reinvesting it.
Incorporated If a company is formed which has its own identity separate from the identities of its members, it is incorporated.
Incorporation This means forming a company. Some companies have limited liability. In other words, the members of the company are not personally liable for debts which the company runs up, as long as the company is run properly.
Indemnity If someone promises to compensate someone else for loss or damage, it is called an indemnity.
Independent financial adviser (IFA) This is a qualified person or firm that can give people independent advice on life insurance and pensions and is not tied to a particular company.
Indexation This means making adjustments to allow for the effects of inflation.
Individual Savings Account (ISA) This is a savings account which was introduced 6 April 1999. The income earned by the money invested will be free of tax. In each tax year you can invest in:
- up to three different types of mini ISAs; or
- one maxi ISA.
Inflation This is the name for general price increases.
Inheritance tax This tax is charged on certain gifts, and on the value of the estate left by someone who has died.
Input tax This is the value added tax you pay when you buy goods and services.
Investment Companies with Variable Capital (ICVCs) An ICVC is a pooled investment that allows you to invest in a range of equities, fixed interest securities and other investments. You purchase shares in one or more of the funds of the ICVC. The choice of investments held within the funds is determined by the aim of the fund.
Insolvent If debts cannot be paid when they are due for payment, the person or organisation owing the money is insolvent.
Inspector of taxes This is a person who works for the Inland Revenue, dealing with tax returns and tax assessments. Tax inspectors check how much tax the taxpayers owe.
Insurance When policyholders pay premiums to buy insurance cover, the company receiving the premium agrees to pay for the policyholder's loss if a certain event happens.
Intangible assets Intangible assets cannot be touched. Examples are goodwill and patent rights.
Intellectual property rights This is the general name for rights such as copyrights and patents.
Interest rate swaps If you are earning variable interest on money you have deposited at your bank, but you are worried that interest rates will drop in the future, you can change your investment to earn a fixed rate of interest. This will protect you from falling interest rates and it is called an interest-rate swap.
Interim dividend The directors of a company can review the company's performance part way through the financial year and declare a dividend. This is called an interim dividend.
Intestacy This happens when someone dies without leaving a will. Their estate is divided up between their relatives following the rules set by law.
Investment grade issuers These are soundly based companies of the highest quality.
Investment trust This is a company which is quoted on the stock exchange and which invests in other companies.
ISA This is an individual savings account. The interest earned from an ISA is free of tax.
Issued share capital This is share capital which has been allocated to shareholders who have subscribed for (asked for) shares.
Joint lives Some life insurance policies cover two people's lives and pay out on the first death.
Joint lives last survivor This sort of life insurance is on two people's lives and pays out on the second death.
LAPR This stands for life assurance premium relief. Before 14 March 1984 there was tax relief on life insurance premiums paid by policyholders for policies which qualified for tax relief. Policies which started before 14 March 1984 still qualified for tax relief on the premiums paid since 14 March 1984.
Lapse If a policy becomes void because conditions have not been kept to (such as failing to pay premiums), it has lapsed.
Legacy A legacy is a gift left to someone in a will, but it does not include land.
Legal mortgage When a person takes out this type of mortgage the lender owns the property which is mortgaged, until the mortgage has been repaid.
Letter of credit This is a letter one bank sends to a second bank asking them to pay money to a named person. However, certain conditions must be met.
Liabilities These are debts that a person or an organisation owes.
Licensed conveyancers These are the only people, other than solicitors, who are allowed to do conveyancing and charge a fee for it.
Lien A lien is the right to keep possession of something, owned by someone who owes a debt, until the debt has been settled.
Life assurance (or insurance) policy This type of policy is a contract between the policyholder and the insurance company. The insurance company will normally pay out if the policyholder dies.
Life assured This is the person whose life is assured.
Life of another If you take out assurance cover on another person's life, you have taken it out on the life of another.
Limited company This type of company limits how much its members will have to pay if the company is wound up. The members of most limited companies will only have to pay any money unpaid on their shares. If a company limited by guarantee is wound up, the money its members have to pay is limited to the amount shown in the memorandum.
Limited liability If a company is set up with limited liability for its members, a limit is put on how much the members would have to pay if the company was wound up.
Liquidation This is the process of winding up a company by paying its creditors and distributing any money left among the members.
Lower earnings limit If you earn below this limit, you do not pay national insurance contributions.
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