CTA key terms

The amount of income an individual may receive free of income tax in a tax year. It is reduced by £1 for every £2 of adjusted net income above £100,000 and is lost entirely once income reaches £125,140.

A non-cash reward given by an employer to an employee, such as a company car or private health cover. Its taxable value is normally added to employment income unless a statutory exemption applies.

Pay As You Earn: the system under which employers deduct income tax and Class 1 NICs from salary and wages and pay them over to HMRC, so most employees settle their tax during the year.

The cap on tax-relieved pension contributions an individual can make in a tax year across all arrangements, with tapering for high earners and carry-forward of unused amounts from earlier years.

The tax charged on the taxable profits of UK-resident companies and on the UK profits of non-resident companies, covering trading income, property income, investment income and chargeable gains.

The profit of a trade calculated under tax rules rather than accounting rules, after disallowing capital and private expenditure and adjusting for items that are treated differently for tax.

Statutory deductions that give tax relief for spending on qualifying assets such as plant and machinery, granted instead of relief for the depreciation charged in the accounts.

A 100% first-year allowance for most plant and machinery, subject to a cap on total qualifying expenditure in a 12-month period, open to businesses of every size.

The surrender of trading losses and certain other amounts between companies in a 75% common ownership group, allowing one company's losses to reduce another's corporation tax.

A UK-resident company controlled by five or fewer participators, or by any number of director-participators, which brings in special rules on loans to participators and on distributions.

Tax on the increase in value realised when an asset is sold, gifted or otherwise disposed of, charged on individuals, trustees and personal representatives; companies pay corporation tax on their gains instead.

The amount of net chargeable gains an individual or trustee can realise in a tax year without paying capital gains tax. Any unused amount cannot be carried forward to a later year.

A capital gains tax relief that taxes qualifying gains at a reduced rate up to a lifetime cap, available on the sale of a business or of shares in a personal trading company that meets the conditions.

Relief that exempts, or reduces, the capital gains tax on a gain from disposing of a property that has been the owner's only or main home for some or all of the ownership period.

A relief that defers capital gains tax by reducing the recipient's base cost by the amount of the held-over gain, available for gifts of business assets and for gifts into or out of certain trusts.

A tax on the value of a person's estate on death and on some lifetime transfers, charged above the available nil rate bands, with a reduced rate where a substantial part of the estate goes to charity.

The threshold below which an estate or lifetime transfer bears no inheritance tax. Any part unused on the first death of a married couple or civil partners may be transferred to the survivor.

An additional inheritance tax allowance available where a main residence is inherited by direct descendants. It is withdrawn gradually for estates whose value exceeds a set limit.

A lifetime transfer to an individual or to a trust that is not immediately chargeable. It becomes fully exempt if the transferor survives seven years; otherwise it is taxed as part of the death estate.

A lifetime transfer to a relevant property trust, such as a discretionary trust, that is immediately chargeable to inheritance tax to the extent it exceeds the transferor's available nil rate band.

A gift in which the donor keeps some benefit or interest in the property given, so that its value remains part of the donor's estate for inheritance tax purposes.

A trust in which no beneficiary has a fixed entitlement and the trustees choose how and when to distribute. It is taxed under the relevant property regime for inheritance tax.

A trust in which the beneficiary is absolutely entitled to the assets and income, so the property is treated as belonging to that beneficiary for all tax purposes.

A tax on consumption charged on supplies of goods and services by taxable persons. Businesses collect it as output tax and reclaim it as input tax, accounting to HMRC for the difference.

The level of taxable turnover that obliges a business to register for VAT. It is measured on a rolling 12-month basis, and a lower limit applies to voluntary deregistration.

VAT charged on purchases and expenses incurred by a VAT-registered business, recoverable against the output tax it owes where the spending supports taxable business activity.

The rules that decide which country's VAT applies to a transaction by reference to where the supplier, customer or goods are located and whether the customer is a business or a consumer.

An election that turns supplies of land and buildings from exempt into standard-rated, so that the supplier can recover input tax on costs connected with the property.

A tax on buying land and buildings in England and Northern Ireland, charged on the price using banded rates, with higher charges for additional dwellings and for purchases by companies.

Relief that prevents the same profit being taxed twice, given either as a credit for foreign tax against the UK liability or by exempting the foreign income under the terms of a tax treaty.

The legal link between a person and the country they treat as their permanent home. It governs exposure to UK inheritance tax on worldwide assets and access to the remittance basis.

A way of taxing certain non-UK domiciled individuals on foreign income and gains only when they are brought into the UK, in exchange for losing allowances and paying a charge after several years of residence.

A fixed place of business, or a dependent agent, through which a company trades in another country, giving that country the right to tax the profits attributable to it.

Rules requiring transactions between connected parties to be priced as if the parties were independent, with taxable profits adjusted where the actual terms are not arm's length.

The system under which taxpayers report their income and gains on a return, calculate their own liability and pay it by the statutory dates, subject to HMRC compliance checks.

Two advance payments towards the current year's income tax and Class 4 NICs, each normally half of the previous year's liability, due at the end of January and at the end of July.

An assessment HMRC may raise after the normal time limits where profits or gains were not assessed, for example because a return was careless or deliberately wrong.

The duty of tax and accountancy firms to identify clients, keep records and submit a suspicious activity report to the National Crime Agency when they suspect property is criminal in origin.

Professional Conduct in Relation to Taxation: the ethical framework for UK tax advisers covering integrity, objectivity, confidentiality, competence and the line between acceptable planning and abuse.