Tax glossary
UK Tax Glossary
Every tax term a UK limited company director runs into, explained in plain English with a worked example and the figure that applies for 2026/27.
The glossary is written and maintained by a chartered accountancy practice in London, and every entry is reviewed each tax year so the rates you read here match the ones we use on client work.
47 terms, reviewed for 2026/27
A
- Accounting period — An accounting period is the span of time a company's accounts and corporation tax return…
- Annual accounts — Annual accounts are the statutory financial statements every limited company must prepare after its year…
- Annual Investment Allowance — The Annual Investment Allowance lets a company deduct the full cost of qualifying plant and…
- Associated companies — Two companies are associated for corporation tax when one controls the other, or both are…
B
- Benefit in kind — A benefit in kind is something of value a company gives a director or employee…
- Business Asset Disposal Relief — Business Asset Disposal Relief cuts capital gains tax to 18% on qualifying gains when you…
C
- Capital allowances — Capital allowances are the tax relief a company gets for buying equipment, vehicles and fixtures.…
- Capital gains tax — Capital gains tax is charged when an individual sells an asset for more than it…
- Close company — A close company is one controlled by five or fewer participators, or by its directors.…
- Confirmation statement — A confirmation statement confirms to Companies House that the details on the public register are…
- Corporation tax — Corporation tax is the tax a UK limited company pays on its taxable profits, including…
- CT600 — The CT600 is a company's corporation tax return. It is filed online with the accounts…
D
- Director's loan account — A director's loan account records money moving between a director and their company that is…
- Distributable reserves — Distributable reserves are the accumulated realised profits a company has left after tax and previous…
- Dividend allowance — The dividend allowance is the amount of dividend income you can receive each tax year…
- Dividend voucher — A dividend voucher is the written record of a dividend payment, showing the company, the…
- Dormant company — A dormant company is one with no significant accounting transactions in a financial period. It…
E
- Employer pension contributions — A limited company can pay pension contributions for its directors and employees as a business…
- Employer's National Insurance — Employer's National Insurance is the contribution a company pays on its employees' earnings, charged at…
- Employment Allowance — Employment Allowance lets eligible employers reduce their annual employer's National Insurance bill by up to…
F
- Full expensing — Full expensing lets a company deduct 100% of the cost of qualifying new plant and…
I
L
- Late filing penalty — A late filing penalty is the automatic fine charged when company accounts reach Companies House…
- Limited company — A limited company is a separate legal entity registered at Companies House, owned by shareholders…
M
- Making Tax Digital — Making Tax Digital is HMRC's programme requiring businesses to keep digital records and file through…
- Marginal relief — Marginal relief reduces corporation tax for companies with profits between £50,000 and £250,000. It smooths…
- Mileage allowance — Mileage allowance is the tax-free amount a company can pay a director or employee for…
N
- National Insurance — National Insurance is a charge on earnings that also builds entitlement to the state pension…
P
- P11D — A P11D reports taxable benefits and expenses given to a director or employee during the…
- PAYE — PAYE is the system through which a company deducts income tax and National Insurance from…
- Payments on account — Payments on account are advance instalments towards your next self assessment bill, due on 31…
- Personal allowance — The personal allowance is the amount of income you can receive each year before income…
Q
- Quarterly instalment payments — Quarterly instalment payments are the corporation tax timetable for large companies. Once augmented profits exceed…
R
- R&D tax relief — R&D tax relief rewards companies that seek an advance in science or technology by resolving…
- Registered office — The registered office is a company's official address on the public register, where statutory post…
S
- Salary sacrifice — Salary sacrifice is a contractual reduction in pay in return for a non-cash benefit, most…
- Section 455 tax — Section 455 tax is a company charge of 35.75% on a director's loan still outstanding…
- Self assessment — Self assessment is the system through which individuals report income HMRC has not already taxed,…
- Sole trader — A sole trader is an individual running a business in their own name, with no…
T
- Trading allowance — The trading allowance exempts the first £1,000 of gross trading or casual income each tax…
- Trivial benefits — A trivial benefit is a small non-cash gift from the company that is exempt from…
U
- UTR — A UTR is the ten-digit Unique Taxpayer Reference HMRC uses to identify a taxpayer. A…
V
- VAT Flat Rate Scheme — The VAT Flat Rate Scheme lets a small business pay HMRC a fixed percentage of…
- VAT registration threshold — A business must register for VAT once taxable turnover in any rolling twelve months exceeds…
- VAT return — A VAT return reports the VAT charged on sales and reclaimed on purchases for a…
W
- Writing down allowance — A writing down allowance gives tax relief on capital assets over time rather than all…