Adverse Credit is term referring to your credit rating, if you are described as having adverse credit you are deemed to be a less then ideal candidate to loan money to.
Arrears are payments you have been unable or unwilling to keep up with, arrears are usually referred to in units of months. If you are two months in arrears then you owe two months payments. Arrears are always noted down on your credit record and can affect your future ability to obtain credit such as loans or credit cards.
If you have bad credit you will find it hard to obtain such products as credit cards, loans and mortgages. Similar to adverse credit.
This is usually a final resort for anyone with dire debt problems, only ever recommended if all other avenues have been exhausted.
Capital Gains Tax
Capital Gains Tax (CGT) was introduced in 1965. Individuals, trustees and personal representatives are potentially liable. Companies are subject to most of the CGT rules. However, Companies do not pay CGT, but instead pay corporation tax on chargeable gains, e.g. on the sale of an asset. It is charged on total chargeable gains in the tax year, after certain deductions (if available), e.g. allowable losses, taper relief and the annual exemption. The main CGT rules are contained in the Taxation of Chargeable Gains Act 1992. UK residents and ordinary resident individuals are liable on all gains, wherever they arise. However, if they are also non-UK domiciled, they are generally only liable to CGT on gains introduced (‘remitted’) into the UK.
Consumer Credit Act
The consumer credit act is a requirement for all financial businesses, it outlines a course of action from the office of fair trading, save under certain conditions.
Country Court Judgment (CCJ)
If you have a CCJ it means a judge has ruled against you in court, this incurs a fine of the amount you owed plus any costs fine which must be paid off legally.
Corporation Tax is charged on UK resident companies, as well as non-resident companies carrying on a UK trade through a permanent establishment in the UK; and also on members’ clubs, societies and voluntary associations. A company is normally considered to be resident in the UK if it is incorporated in the UK, or if it is managed and controlled in the UK. However, a company which is regarded as non-UK resident under a double tax treaty is treated as being non-UK resident for tax purposes. Companies liable to corporation tax are chargeable on profits arising in its accounting period, including its taxable income and chargeable gains. The income and gains of a company are calculated using similar principles as those for income tax and capital gains tax in many cases.
A card indicating the holder has been granted a credit limit. The holder can then purchase goods up to the limit agreed to with the creditor.
credit rating can have an effect on whether you can obtain a loan, mortgage or credit cards. It lists all your credit activity, as in which loans you taken out, if they were paid on time, if you have any CCJs against your name or if you have gone through bankruptcy.
A creditor is a lender of finance such as a loan, credit card, store card or mortgage.
A credit reference agency will search your credit record on behalf of a lender to see if you have any CCJs or defaults.
Data Protection Act (DPA)
The Data Protection Act was brought in to protect consumers’ personal information from being made available anybody wishing to buy it.
When you consolidate loans you replace a multiple of loans with a single loan, often with a lower monthly payment and a longer repayment period. It’s also called a consolidation loan.
Debt management is a financial agreement a company organises for you with your creditors, it allows you to lower your monthly payments in accordance to government legislation.
If you miss a payment to one of your creditors then you are in default. If you have a default on your credit rating it can damage your chances of getting a loan, credit card or mortgage.
A direct debit is an arrangement made with your creditors and bank. It is a promise to pay a certain amount of money on a certain day or days of the month.
The equity you have in your home is the market value of set with the amount secured against it.
Fixed Rate Loan
A fixed rate loan is a loan that has its interest rate and APR fixed at the start and through the duration regardless of changes in market indexes or other interest rate fluctuations.
Flexible Rate Loan
A flexible rate loan is often easier to get as its interest can vary according to market index or other fluctuations in rates.
A guarantor ensures that he will repay a debt incurred by another person to the creditor if they are unable to repay the original loan. Most common example would be a parent being a guarantor for their child.
Individuals, trustees and personal representatives are potentially liable to income tax. Companies pay corporation tax on profits and gains, but may also pay income tax (e.g. on certain investment income). Income tax is paid on taxable income of the tax (or ‘fiscal’) year, which runs from 6 April to the following 5 April. Individuals (men, women and children) are broadly chargeable to income tax, on UK and overseas income if they are UK resident, subject to certain exceptions if they are not ordinarily resident or not domiciled in the UK. Non-residents are generally liable to income tax on income arising in the UK. Double tax relief may generally be claimed if the same income is taxable in the UK and a foreign country. Taxable income is broadly calculated by adding together amounts under different categories (e.g. employment income, trading income, property income, savings and investment income), reducing this total by allowable deductions and personal allowances if appropriate, applying income tax rates to that taxable income, and reducing the tax so calculated by certain other deductions and allowances (if applicable).
Inheritance Tax (IHT) is a tax on chargeable transfers made by an individual during lifetime, and on the value of the death estate. IHT is also chargeable in respect of certain events relating to settlements (e.g. transfers from discretionary trusts). A ‘chargeable transfer’ is a ‘transfer of value’ made by an individual, which is not an exempt transfer. IHT is payable by domiciled individuals on chargeable worldwide property, and by non-UK domiciled individuals in respect of chargeable UK property. Many gifts are completely IHT exempt, and some lifetime and death transfers are also exempt. Most lifetime gifts are ‘potentially exempt transfers’ which only become chargeable to IHT if the donor dies within 7 years after making them. A cumulative total is kept of chargeable lifetime transfers, and no tax is payable on lifetime gifts or the death estate until a threshold (commonly referred to as the ‘nil rate band’) is exceeded.
Independent Financial Advisor (IFA)
A person qualified to give financial advice to clients on life insurance, pensions, funds, and other financial products, who is not tied to any one financial institution. They may charge their clients a fee for their advice or may receive a commission on the products which the client buys.
The interest rate on a loan is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned.
The legal document held by Land Registry that records who has a claim on your property e.g. your lender.
A loan application is a form filled in when credit is required, it outlines the details of a borrower so the lender can judge the credit worthiness of the applicant.
The bringing together of all loan debt into one payment, can save you time and money if done correctly.
National Insurance Contributions
National Insurance contributions (NICs) are potentially payable by individuals aged between 16 and state pension age. The amount of contributions payable broadly depends on whether the individual is an employed earner or self-employed; and on their level of earnings. There are 6 separate classes of National Insurance contributions (Class 1, 1A, 1B, 2, 3 and 4). For example, an individual who works for an employer may be liable to Class 1 NICs as an employed earner, whereas a self-employed individual may be liable to pay Class 2 and Class 4 NICs. Those who are both employed and self-employed may have to pay more than one class of NICs. Individuals who are not liable may be able to pay contributions on a voluntary basis (normally Class 3 NICs) to protect or improve entitlement to state benefits, if appropriate. NICs are broadly calculated either as a percentage of earnings or benefits (Class 1, 1A, 1B or 4), or at a flat rate (Class 2 or 3), subject to certain thresholds in most cases.
Pay As You Earn (PAYE) is the system for deducting income tax (and National Insurance contributions) from employment income. The employer must generally pay the total amount deducted from employees each tax month (ending on the 5th) including employer’s NIC to HM Revenue & Customs within 14 days of the end of the tax month (ie by the 19th) unless the payment is made electronically, in which case the remittance is due within 17 days after the end of the tax month (ie by the 22nd). Employers whose average monthly liability is less than £1,500 can choose to pay quarterly rather than monthly by the 19th (or 22nd) of July, October, January and April. In addition to employees and directors, the PAYE system generally applies to individuals in receipt of occupational pensions.
Personal Allowances are available to UK resident individual taxpayers and to some non-residents (e.g. Commonwealth citizens and EEU nationals) as a reduction from taxable income. If taxable income is less than the personal allowance, no tax liability arises. The allowance depends on the taxpayer’s age, i.e. a higher personal allowance is potentially available in the tax year in which the individual reaches the age of 65. It is further increased at age 75, although the higher ‘age related’ personal allowances are subject to an income limit.
Self-assessment is the tax system operating in the UK for the administration and collection of income tax, capital gains tax and corporation tax (a similar system also operates for inheritance tax purposes). Separate self-assessment regimes operate for individuals (including trustees and personal representatives) and companies, but along broadly similar lines. Taxpayers are generally required to complete an annual tax return and submit it to HM Revenue & Customs before a statutory filing deadline. Penalties are generally imposed for late returns. There is also a general requirement for taxpayers to calculate (i.e. ‘self-assess’) their own tax liabilities (although in certain circumstances HM Revenue & Customs will calculate the tax liabilities of individuals, personal representatives or trustees, if requested). The tax liability must be paid by fixed payment dates in order to avoid interest charges accruing, and surcharges may also be imposed (but not for companies). Payments on account may also be required for the next tax year or accruing period.
Stamp duties were first introduced in 1694. Stamp duty is a tax on ‘instruments’ (i.e. documents) transferring certain types of property (e.g. shares in a company), and on certain other legal documents. Stamp duty is sometimes described as a ‘voluntary tax’ although it is obligatory in certain cases. However, documents liable to stamp duty may not be registered or used as evidence of ownership unless they have been duly stamped. There are two categories of stamp duty, a fixed duty of £5 (which does not vary with the content of the document), and ‘ad valorem’ duty (a percentage which varies, e.g. according to the consideration paid, or to the value of the property to which the document relates). In addition, some documents are not liable to any stamp duty, or are liable at a ‘nil’ rate. Stamp duty was replaced by stamp duty land tax in respect of UK land and buildings from 1 December 2003.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) was introduced on 1 December 2003, replacing the previous system of Stamp Duty on documents. SDLT is a tax on transactions involving land and buildings in the UK (e.g. on the sale of houses or flats), including leases. SDLT is a ‘process now, check later’ system broadly similar to self-assessment, requiring the completion and submission of a land transaction return and the payment of duty, if appropriate. SDLT is broadly charged as a percentage of chargeable consideration for the transaction, subject to certain thresholds, reliefs and exemptions if applicable.
Under the self-assessment regime for Individuals, trustees and personal representatives, in addition to late payment interest charges, if the balancing payment of tax (and/or Class 4 National Insurance contributions, if applicable) for a tax year remains unpaid after the due date, a liability to surcharges generally arises. If the tax due is unpaid after 28 days following the due date (ie normally by 28 February), the surcharge is 5% of the unpaid amount. If the tax is still unpaid after 6 months following the due date a further 5% of the tax unpaid. A surcharge is due for payment within 30 days after the date on which it is imposed, and attracts interest if paid late.
Value Added Tax
Value Added Tax (VAT) is an indirect tax on consumer expenditure, in respect of business transactions mostly involving goods and services. VAT is payable broadly if the transactions are supplies made in the UK or Isle of Man by a taxable person in the course of a business, which are not specifically exempted or ‘zero rated’. VAT is charged at a standard rate (17.5%), or a zero rate (0%), or at reduced rates depending on the nature of the supply. Some transactions (e.g. insurance premiums) are exempt, which means that no VAT is payable, whilst other transactions (e.g. between companies within the same VAT group) are outside the scope of VAT completely.