Topic 12

Question 1

Benefit

Answer 1

A government payment made to individuals who meet specific conditions to help them meet living expenses, such as disabled people who are unable to work

Question 2

Budget

Answer 2

A plan of expected incomings and outgoings over a set time period such as a month. Also the term given to the government’s spending plan set out in March or April.

Question 3

Chancellor of the Exchequer

Answer 3

The British Cabinet minister responsible for economic matters and in charge of the Treasury

Question 4

Dividend

Answer 4

A payment of profits from a company to its shareholders, often at twice yearly intervals as cash or as further shares

Question 5

Gross interest

Answer 5

Interest paid without tax deducted

Question 6

HM Revenue and Customs HMRC

Answer 6

The government department that collects various taxes

Question 7

Income

Answer 7

Earnings, savings and interest payments received within a certain timeframe

Question 8

Income Tax

Answer 8

Tax paid on earnings from employment, self-employment and interest on savings.

Question 9

Individual Savings Account ISA

Answer 9

An account that pays interest tax-free on savings up to a certain level. There are cash ISAs or stocks and shares ISAs. Junior ones available for under-18s. Rebranded as NISAs in 2014 when the rules were changed.

Question 10

Interest

Answer 10

Money either charged to a borrower or paid to a saver. Paid on savings accounts and some current accounts, charged on overdrafts. Each provider decides rate of interest depending on account or credit history.

Question 11

Investment

Answer 11

Money paid into financial products; the idea is that the value of the product will grow over time so the person will get more money back than they put in.

Question 12

Mortgage

Answer 12

A loan taken out to pay for a property, usually over a long time, e.g. 25 years

Question 13

National Insurance Contributions

Answer 13

Money deducted from the pay of people who are employed or self employed and used by the government to fund state pensions and other benefits

Question 14

National Living Wage

Answer 14

The minimum that people aged 25 and over must be paid per hour by law.

Question 15

National Minimum Wage

Answer 15

The minimum pay per hour to which workers are entitled by law. Rate depends on age and being an apprentice or not.

Question 16

Net interest

Answer 16

Interest paid after tax has been deducted from the gross (total) amount earned.

Question 17

P45

Answer 17

A document legally required from an employer when an employee stops working for then. It summarises the employee’s tax and National Insurance details for the next employer.

Question 18

P60

Answer 18

A document prepared at the end of every tax year to show all the income tax and National Insurance contributions paid by an individual during the previous 12 months

Question 19

Pension

Answer 19

An income that people receive after retiring from work. In the UK people receive a state pension but may also receive pension payments from schemes from their employers.

Question 20

Personal allowance

Answer 20

The amount of income you are allowed to earn before you become liable for income tax.

Question 21

Self-assessment

Answer 21

A method used, often by self-employed people, to calculate the amount of tax and National Insurance they need to pay.

Question 22

Self-employment

Answer 22

Earning an income by selling your goods and services directly to a consumer rather than being employed by somebody else and paid a wage.

Question 23

Taxable Income

Answer 23

Income on which tax must be paid after deducting allowances and any permitted expenses

Question 24

Tax band

Answer 24

A category of income on which a specific rate of tax is payable

Question 25

Tax code

Answer 25

A code used by a person’s employer or pension provider to calculate the tax to deduct from pay or pension

Question 26

Tax paid at source

Answer 26

Tax deducted by the provider on behalf of the government from interest earned on savings. From April 2016, providers no longer deduct income tax from savings interest at source.

Question 27

Tax Return

Answer 27

A tax form completed annually by people in certain situations (e.g. self employed people or employed people who receive money in addition to their salary). It sets out details of income and expenditure and allows the taxpayer or HMRC to calculate the amount of tax and NI contributions owed.

Question 28

Tax Year

Answer 28

Also known as the financial year, the tax year runs from 6 April to 5 April in the following year. The tax people owe is calculated according to how much they have earned April-April rather than January to December.

Question 29

Zero-hour contract

Answer 29

A type of employment contract that does not set out a fixed number of hours that an employee must work and be paid for. The employer is not obliged to provide work nor the employee to take work offered.