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: C

Capital Allowance: An allowance reflecting depreciation. It normally applies to assets with a long life span. When such an asset is used for business purposes, the purchase cost is not normally allowable as an expense, so a Capital Allowance can be claimed instead.

Capital Gains Tax: A capital gain arises when something you own (that is an asset):
  • is given away, exchanged, sold or disposed of in any other way, and
  • its value has increased since you acquired it.
Examples include stocks and shares, land and businesses. Tax is charged not on the asset but on its increase in value.

Cash Equivalent: This is the cash measurement of a benefit in kind. When an employee receives a taxable company benefit, there is no money on which tax can be calculated. Instead, the employer works out the equivalent of the benefit.

Casual Earnings: When one does a job on an irregular basis, the earnings are classed as casual earnings.

Certificate of Tax Deposit: It is possible to pay a large tax bill in advance by purchasing a Certificate of Tax Deposit from the HMRC.

Charitable Gifts Relief: Tax relief at the payers top tax rate is available for charitable donations under the gift aid scheme.

CIS4: A registration card for individual subcontractors in the construction industry.

Close Company: A company controlled by no more than 5 shareholders. This covers most private companies in the UK.

Commuting: Every day travel to work is not usually allowable for tax purposes. Exceptions may apply when a workplace is temporarily moved, or where a person works from home and travels to various customers.

Company Car: This is one of the taxable benefits in kind - a car provided by the employer that one can use for one's own private purposes. Special rules are used to work out the amount of the benefit.

Construction Industry Scheme: A tax scheme regulating payments from contractors to subcontractors in the Construction Industry. In effect, an individual subcontractor should have a CIS4 Registration Card issued by the Tax Office, and the contractor must deduct tax at source (currently 20%) before making a payment. Each payment and tax deduction should be recorded on a tax deduction voucher. For more information, please refer to our self-employment tax section.

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