Mandate A bank's customer writes instructions on the mandate for the bank to follow when operating the customer's account.
Market capitalisation If you multiply the number of ordinary shares a company has issued by their market price, you get the market capitalisation value of the company.
Mature/maturity If an investment policy comes to the end of its life, it has reached maturity.
Maxi ISA A maxi ISA includes investments in stocks and shares and may also allow investments in cash and life assurance. An individual can invest up to £7000 in 2000/2001 in a maxi ISA and up to £5000 in the following years.
Median In statistics the median is the point where half the items in a series are on one side and half on the other side. For example, a series of numbers might be 1, 3, 5, 7, 11. Five is at the median point. Median is not the same as average.
Member The shareholders of a company are its members.
Memorandum and articles of association The memorandum gives details of a company's name, objects (purposes) and share capital. It also sets out the limits of the shareholders' liability if the company has to be wound up.
The articles set out the members' rights and the directors' powers.
Merchant bank This is a specialist bank which deals in foreign exchange and advises large companies on mergers, takeovers, raising capital and so on.
Middle-band earnings These are earnings between lower-band earnings and upper-band earnings.
Mini ISA There are three types of mini ISA you can invest in, these being cash, life assurance and stocks and shares. The income earned will be free of tax.
Minority interest If more than 50% of the shares in a company are held by a holding company, the remaining shares are the minority interest.
MIRAS This stands for mortgage interest tax relief at source. It was income tax relief on mortgage interest paid (up to the limit allowed), and the mortgage repayments were reduced to allow for it.
Mortgage A mortgage is using a property as security for a debt.
National insurance contributions Most employees, employers and the self-employed pay national insurance contributions. The National Insurance Fund pays out benefits such as Jobseeker's Allowance, retirement pensions and Widow's Benefit.
Negotiable instrument This is a document which :
- is signed;
- is an instruction to pay an amount of money;
- can have its ownership changed by changing the name it is paid to; or
- can have its ownership changed simply by being delivered to its new owner.
Net book value This is what an asset cost, as recorded in the books of account, less all the depreciation taken off the asset for age and wear.
Net interest This is interest which has had income tax taken off it.
Net profit This is the profit left after all overheads have been taken off.
Net relevant earnings These are the earnings of self-employed people or earnings of people who are not in an employer's pension scheme. Net relevant earnings are used to work out the highest amount which can be invested in a pension scheme and qualify for tax relief.
Nominal damages When token damages are awarded because little damage has been done, they are called nominal damages.
Non-profit A non-profit organisation is one which is not intended to make a profit, such as a credit union.
Note A note is a document acknowledging that a debt exists and promising to repay that debt.
Occupational pension scheme This is a pension scheme organised by an employer to provide pension benefits for employees.
Offer price This is how much people have to pay for each unit when investing in unit trusts.
Official receiver This is a person appointed to act as a receiver in bankruptcies and company winding-up cases. The Department of Trade and Industry appoints official receivers.
Operating lease Under this type of lease, ownership of the leased goods stays with the lessor (the company leasing out the goods).
Operating profit (or loss) The profit (or loss) from a company's principal (main) trading activity.
Opting out If an employee leaves an occupational pension scheme, or chooses not to join one, it is called opting out.
Option Under this sort of contract, paying an amount of money gives a right to buy or sell goods at a fixed price by a particular future date.
Orders not to pay If a bank's customer asks the bank not to pay a cheque, the bank may write 'orders not to pay' on the cheque before it is sent back.
Ordinary resolution If a resolution can be passed at a meeting by more than half of those voting agreeing to the resolution, it is an ordinary resolution.
Out of date If a cheque is dated more than six months before the date when it is presented for payment, the bank may refuse to pay it.
Output tax This is the value added tax (VAT) charged by a business registered for VAT, on the goods and services it sells.
Overdraft facility If a bank agrees to let a customer borrow from the bank by taking out more than the customer has in the bank, an overdraft is created. The bank puts a limit on how much the customer can borrow and this is called the overdraft facility.
Paid-up share capital This is the money paid on shares allotted to the members.
PAYE An employer collects income tax and national insurance are collected from employees' pay and pays it to the Inland Revenue. This system is called Pay As You Earn (PAYE).
Payee This is the person money is being paid to.
Payment countermanded If a bank's customer asks the bank not to pay a cheque, the bank may write 'payment countermanded' on the cheque before it is sent back.
Payment protection insurance This insurance covers people's finance agreement repayments if they cannot work because of long-term illness or redundancy.
Pension benefits The pensions and lump sums people receive from their private pensions are called pension benefits.
Pension mortgage This is a mortgage which will be repaid out of the lump sum from a pension policy or retirement annuity.
Pensionable age This is the age people have to reach to be entitled to draw their state pension.
PEP This stood for personal equity plan. It was a way of investing in stocks and shares through a Government scheme.
Permanent assurance This is life assurance cover on someone for the rest of their life.
Permanent health insurance This is a type of insurance policy which pays an income if the policyholder suffers from a long-term illness or disability.
Personal allowance People do not have to pay income tax on all their income. Everyone gets a tax allowance which allows them to have some income they do not have to pay tax on. However, the amount varies depending on personal circumstances.
Personal guarantee This is a pledge by a person to a bank to repay a debt if the bank's customer fails to pay it.
Personal pension Self-employed people or people who are not in an occupational pension scheme can take out these pensions.
Personal representative If someone dies, a personal representative is appointed to deal with the dead person's estate. If there is a will, the executors appointed will be the personal representatives. If there is no will, the courts will appoint someone.
PIN This stands for personal identification number. It is a secret number given to an account holder to be used when they put their credit card or cash card into an automatic teller machine (ATM). If the number they use is correct, they will be allowed access to their account.
Please represent If a bank has refused to pay a cheque because there was not enough money available in the customer's bank account, it may mark the cheque 'please represent'. It will do this if there is likely to be enough money to pay the cheque in a few days time.
Pledge If someone pledges goods, they let a second person take possession of the goods, but the person pledging the goods still owns them. It is often done as security for money owed or to make sure that something is done as promised.
Poll When a company has a poll vote, each shareholder has one vote for each share they own.
Post-dated If a cheque is written with a date in the future, it is 'post-dated'.
Post-dated (no represent) If a cheque is returned unpaid with this written on it, the bank will not honour it if it is represented.
Power of attorney A power of attorney is a document which gives power to the person appointed by it to act for the person who signed the document.
Premium This is the money the policyholder pays to the insurance company in return for the cover set out in the insurance policy.
Prepayment (prepaid) In a set of accounts this means something which has been paid out which covers a period after the end of the accounting period. You may have paid an insurance premium for the year to 30 September. If your accounting year ends on 30 June, 3 months of your premium will be prepaid.
Present When a bank sends a cheque it has received to the bank which has to pay it, it is 'presented' for payment.
Principal activity This is a company's main trading activity.
Private limited company A private limited company cannot sell its shares to the public and is not listed on the stock exchange.
Pro rata This means in proportion to. For example, if ten items cost £100, you would expect three items to cost £30, if they were pro rata.
Probate When someone dies, the executors of the dead person's estate apply to the court for authority to deal with the estate. This authority is called probate.
Profit and loss account A profit and loss account shows the money a business has earned from selling goods and services, less the money spent on goods, services and overheads.
Promissory note This is a written promise to pay an amount of money to someone at a given time or on demand.
Prospectus If a public company wants to people to invest in it, it prepares a prospectus giving details of its past performance and its plans for the future.
Provision When accounts are being prepared and an amount needs to be set aside for liabilities which are known to exist, but which cannot be measured accurately, the amount set aside is called a provision.
Proxy This is a person appointed by a shareholder to go to a meeting of shareholders. The proxy can vote at the meeting for the shareholder.
Proxy form If a proxy form is delivered to the company at least 48 hours before the shareholders' meeting, the person who is the proxy will be able to vote at that meeting.
Public liability This is a type of insurance cover to protect people and businesses from claims made by members of the public.
Public limited company (plc) A public limited company can offer its shares to the public and is often listed on the stock exchange.
Purchased life annuity A person can buy this type of annuity from an insurance company by paying a lump sum.
Put option This is a right to sell foreign currency at a particular exchange rate.
Qualifying policy This is a policy which can pay its proceeds, free of tax, if the conditions have been met.
Quartile In statistics the quartile point is the spot where one quarter of the items in a series is on one side and three quarters are on the other side. For example, if a series of numbers was 1, 3, #, 4, 5, 7, 10, 20 and 30, the quartile point (#) would be between 3 and 4.
Quorum A quorum is the lowest number of qualifying people needed for a meeting to be valid.
Rate of risk If an investment carries more risk it is expected to deliver better returns than a lower-risk investment.
Real property This is land and rights over land (such as an easement).
Receivership If a company defaults in repaying a secured debt, the debtor may appoint a receiver to sell the assets secured until enough money has been raised to repay the debt. The company is in receivership while the receiver is appointed.
Redemption Redemption means paying off all the money borrowed under an agreement.
Refer to drawer A bank writes 'refer to drawer' on a cheque which it will not pay. The bank sends it back (returns it) to the branch of the bank with the account the cheque was paid into.
Refer to drawer-please represent If this is written on a cheque which is returned, the bank sending the cheque back expects that there may be enough money available in the bank account to pay the cheque when it is presented again.
Related party This is someone, or an organisation, which controls or significantly influences another organisation.
Remedy This is using the law to get compensation for damage done or for rights infringed. A remedy is also using the law to prevent something from happening.
Rent Rent is the term used to describe a payment for using land, buildings or equipment.
Rentcharge This is the name for a charge to use land such as a chief rent but it does not include tenancies and leases.
Representations These are facts borrowers give to lenders about themselves when they apply to borrow money.
Reserves These are amounts set aside in one year's accounts, which can be spent in later years. Some types of reserve can only be spent if certain conditions are met.
Retained profits (or losses) Retained profits are those profits earned by a business which have not yet been spent.
Retirement annuity Retirement annuities are still in existence though none have been started since June 1988. They were taken out by self-employed people or employed people who were not in an employer's pension scheme.
Reversion If the owner of a piece of freehold property leases it to someone else for a period, the freehold property is in reversion during the period of the lease. In other words, reversion is the owner's right to retake possession when the lease ends.
Rights issue This is an issue of extra shares by a company. Existing shareholders can buy extra new shares in proportion to the shares they already hold. The shares are usually on sale at a price lower than the stock-market price to encourage shareholders to buy. The shareholders can sell the rights if they do not wish to use them.
|
