ACCA TX-UK key terms

The amount of income an individual can receive free of income tax in a tax year before any other reliefs. It is reduced for very high earners and is not available to certain non-residents.

An individual's total income after deducting certain reliefs such as trading losses and pension contributions. It is used to measure the personal allowance taper and entitlement to child benefit.

The range of taxable income charged at the lowest income tax rate. Its width can be extended by gift aid donations and pension contributions made net of basic rate tax.

A scheme letting a taxpayer make a donation to charity from taxed income. The charity reclaims basic rate tax, and the donor may obtain higher rate relief and an extended basic rate band.

An annual exemption that lets individuals with small trading or miscellaneous income of a set amount or less pay no tax on it, instead of claiming actual expenses.

An annual exemption allowing individuals with small property rental income to receive a set amount tax free instead of deducting actual expenses, subject to conditions.

Taxable profits from letting land or buildings in the UK or overseas, computed on accruals principles for individuals. It is taxed as non-savings income and reported on the self assessment return.

Profits of a sole trader or partnership computed under tax rules, adjusted for disallowable expenditure and capital allowances, then taxed on the tax year basis.

Tax deductions that replace depreciation for qualifying capital expenditure on plant and machinery. They include the annual investment allowance, writing down allowances and first year allowances.

A generous annual limit of expenditure on qualifying plant and machinery for which a business can claim a full tax deduction in the year of purchase.

A reduced-rate capital allowance claimed on the tax written down value of a pool of plant and machinery, applied after the annual investment allowance has been used.

Contributions paid by employees and employers on earnings from employment. The employee share is deducted through payroll, while the employer share is an additional cost to the business.

A flat-rate weekly contribution historically paid by self-employed individuals with profits above a threshold, providing access to certain state benefits.

Contributions charged as a percentage of self-employed trading profits above set limits, collected through the self assessment return.

The system under which taxpayers report income, gains and reliefs to HMRC on a return and calculate their own liability, with payments on account and filing deadlines.

Advance payments towards an individual's income tax and Class 4 National Insurance bill, usually made twice a year based on the previous year's liability.

A formal challenge to an HMRC decision, assessment or penalty, made to the tax tribunal or through HMRC's internal review process within statutory time limits.

A financial sanction imposed by HMRC for failures such as late filing, late payment, inaccuracies or failure to notify chargeability, often scaled to the seriousness of the default.

The taxable profit from disposing of an asset, calculated as disposal proceeds less allowable costs and reliefs, after deducting available exemptions and losses.

A tax on gains made by individuals and trustees when they dispose of chargeable assets. Rates vary by asset type and the taxpayer's other taxable income.

The amount of net chargeable gains an individual can realise in a tax year before capital gains tax becomes payable.

Costs that may be deducted in computing a chargeable gain, including acquisition cost, incidental purchase and sale costs, and enhancement expenditure reflected in the asset's state.

A disposal of only part of an asset or interest in it, where allowable cost is apportioned using the formula A/(A+B) based on proceeds and remaining value.

A relief giving a reduced capital gains tax rate on qualifying gains from disposing of a business or shares in a personal company, subject to a lifetime limit.

A tax charged on the value of a person's estate on death and on certain lifetime transfers of value, subject to nil rate bands and exemptions.

A lifetime gift that becomes chargeable only if the donor dies within seven years, with taper relief reducing tax on the sliding scale.

The threshold of chargeable estate or transfer value taxed at zero per cent for inheritance tax, with any unused portion transferable between spouses.

A lifetime transfer into a discretionary trust or similar arrangement that is immediately chargeable to inheritance tax to the extent it exceeds available nil rate band.

A tax on the taxable profits of companies, including trading profits, property income and chargeable gains, computed under company tax rules and paid by the company.

A mechanism that gradually removes the benefit of the small profits rate for companies whose profits fall between the lower and upper limits, producing an effective marginal rate.

Companies under common control that must share the corporation tax profit limits, reducing the amount of profits eligible for the small profits rate.

The ability of companies in a 75% ownership group to surrender and claim trading losses and certain other deficits between UK group members.

A relief allowing a company owned by a consortium to surrender losses to consortium members in proportion to their shareholdings, subject to ownership conditions.

An indirect tax charged on supplies of goods and services by taxable persons, with output tax collected from customers and input tax recovered on business purchases.

VAT paid by a taxable business on purchases and expenses that can normally be reclaimed, subject to rules blocking recovery on certain items.

VAT charged by a business on its taxable supplies, which must be accounted for to HMRC on VAT returns after deducting recoverable input tax.

The level of taxable turnover that obliges a business to register for VAT, tested on a rolling twelve-month basis and by forward look.

A tax on the purchase of land and buildings in the UK, charged on the consideration at rates that vary by price band and buyer status.

Costs incurred wholly, exclusively and necessarily in the performance of employment duties that may be deducted from employment income, often requiring employer or HMRC approval.