Learn the UK Tax Language


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UK Tax Glossary

Welcome to our Tax Glossary. Here you will find clear and comprehensible definitions of most of the tax terms you will face when dealing with UK income tax. This Glossary will help you understand the tax language, however it will not offer direct solutions to your tax issues. If you need further advice on any of those tax terms - just ask a tax adviser and get a free consultation right now!


Letter: B


Bad Debts: Money owed that has not been paid to you after a period of time is commonly known as a bad debt.

Balancing Allowances: Business assets depreciate in value, and the cost can be claimed as an expense. This is known as a Capital Allowance. Over the life span of the asset, the amount claimed should cover the depreciation. When an asset is sold though, the actual depreciation may be more than Capital Allowances claimed already. If so, a Balancing Allowance can be claimed. This will be equal to the actual depreciation less Capital Allowances already given.

Balancing Charges: Business assets depreciate in value, and the cost can be claimed as an expense. This is known as a Capital Allowance. Over the life span of the asset, the amount claimed should cover the depreciation. When an asset is sold though, the actual depreciation may be less than Capital Allowances claimed already, and thus, effectively excessive expenses have been claimed. In this case, a Balancing Charge will be shown in the accounts. This will be equal to the Capital Allowances already given, less actual depreciation.

Base Rate: The standard rate of interest, set monthly by the Bank of England. It is the basis of the Official Interest Rate for a tax year. This is used when calculating taxable benefit on low interest loans from an employer.

Basic Rate Tax: The standard percentage of tax that you pay, currently 20%. This means you pay 20p for every £1 taxable at the basic rate.

Basis of Accounting - Accruals: A method of accounting which basically includes income earned and expenses incurred during your accounting period, even though you may not have received or paid the cash.

Basis of Accounting - Cash: A method of accounting where only the income actually received is shown. For example, accounts are prepared to 5 April. Income from work done before that date but received afterwards would not be shown until the next set of accounts. (This basis cannot be used for any set of accounts which began on or after 6 April 99.)

Basis Period: This is the period for which your profits are taxable. Usually, this is the same as the accounting period, because you are taxed on the profit shown on your accounts.
Special rules apply in a) the first three years of business, b) when you finish business, or c) if you change your accounting date.
These rules mean the profit on which you are taxed is not always calculated from one set of accounts, and the basis period can be different than the accounting period.

Benefits in Kind: When your employer gives you something other than salary, it is often deemed to be a taxable benefit. Common examples include company cars, medical insurance, accommodation etc.

Blind Person's Allowance: This allowance is available if you are registered blind. The only requirement for a claim is that you are registered blind with your local authority. The exception is for residents of Scotland and Northern Ireland, where this is not possible. In this case, just tell your tax office accordingly.

Business Expenses: Many, but not all, outgoings of a business can be set against total income when arriving at taxable profits.

Business Income: Any form of income received by the business may be taxable. This usually comes in the form of sales or fees etc, but also includes all other sources of income, such as investments or capital gains.

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