Glossary

Budget

A financial plan for a forward period – typically a month or a year – that sets out expected income and expenditure.

Consumer Price Index (CPI)

A measure of consumer prices in the UK and the main basis for measuring price inflation.

Council Tax

A tax raised by local authorities in England, Scotland and Wales. The tax is based on the valuations of properties.

Gross income

Income before any deductions, including income tax, National Insurance Contributions (NICs) and pension contributions.

HMRC

(Full term: Her Majesty’s Revenue and Customs.) The UK body responsible for collecting tax revenues.

Income tax

A tax on earnings in the UK.

ISA

An Individual Savings Account. A savings account where the interest or other earnings are tax free.

Marks and Spencer

A UK-based department store chain.

National Insurance Contributions (NICs)

Deductions from earnings in the UK, with the record of contributions helping to determine entitlement to certain state benefits like State Pension.

Net income

Income after all deductions from gross income.

Premium Bond

A lottery bond issued by the UK government through its agency National Savings and Investment (NS&I).

Progressive tax

A tax where the amount paid as a proportion of gross income increases as income rises (commonly by step ups in the marginal rate of taxation, e.g. from 20% of gross pay to 40% of gross pay).