Glossary

All A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Accountant

A professional who maintains accounts for businesses and individuals. Businesses use accountants for services such as maintaining financial records, tax affairs and payroll services. Individuals sometimes use accountants for tax returns.

Additional Voluntary Contributions (AVCs)

When you top-up an occupational pension, by making extra contributions into a scheme that’s run by your employer, you make an ‘additional voluntary contribution’.

Administrative and public law

This is the law that governs the way public bodies carry out their statutory duties.

Adviser

A professional, who is qualified to give you advice. Among others, this could be an independent financial adviser (IFA), a whole-of-market mortgage adviser, a solicitor or an accountant.

Advocacy

Legal representation in a hearing, usually carried out by a barrister or solicitor on your behalf.

Agricultural law

This is the law that governs the farming sector, including tax, trusts and property rights connected with agricultural land.

Annual allowance

This is the maximum amount of money you can put into your pension funds in a given tax year, and still claim tax relief.

Annual statement

A statement from your financial services product provider sent to you once a year, showing how much you've paid, what your plan is worth (and if it’s in relation to a loan, what you still owe).

Annuity

At retirement – but before you reach age 75 – you have to buy an annuity with your pension fund. It’s a payment that’s usually paid monthly, which you’ll receive as a guaranteed regular income during your retirement.

Annulment

In England and Wales, this is when a marriage is declared void by a court, either because it was not legally valid when it took place or because it has since become not legally valid. In Scotland this is called a void marriage as the term ‘marriage annulment’ is not a legal term used in Scotland. Legal advice should be sought as this is a complex area.

Approval in principle

This is the certificate that some lenders issue to show how much they’d be prepared to lend you. It’s not a guarantee, but it can be helpful when you’re looking at property to purchase.

APR

Annual Percentage Rate. The figure next to this abbreviation shows you the total cost of taking out a loan, as a percentage, taking into account the term, interest rate and other costs.

Asset allocation

Asset allocation is the process of putting your investment into a range of different investments such as equities, gilts, property and bonds. By diversifying the assets into which you invest, you can protect against any reduction in value of any one or more asset class. Asset allocation depends on your investment plans and attitude to risk.

Asylum

When you ‘seek asylum’, you look for protection in another country. Non-UK residents can apply for asylum as soon as they reach the UK, although they may need legal help to be recognised as a refugee.

Authorised firm

An authorised firm is one that has permission from the Financial Services Authority (FSA) to carry out regulated activities.

 

Banking law

This is the law that governs the banking sector, including money laundering legislation and accounting and financial services regulation.

Bankruptcy

If you can’t pay your debts, you can declare yourself bankrupt – but you will lose control of your assets and income for a set period of time. The period of time is known as ‘bankruptcy’.

Barrister

A barrister is a member of the Bar Council who is expert in presenting legal cases in court.

Basic rate taxpayers

You are a basic rate taxpayer if you are earning below the higher tax rate threshold and are paying 20% income tax for the tax year.

Basic state pension

This is the pension you receive from the government as a result of paying National Insurance (NI) contributions throughout your working life.

Beneficiary

A beneficiary is a person named in a will or under a trust as entitled to receive a bequest or benefit.

Bonds

A bond is a type of security held on a debt or a single premium life assurance investment bond. Bonds are sold to investors by companies.

Buildings insurance

These policies pay the cost of repairing or rebuilding your home if it’s damaged by unforeseen events. A mortgage lender will usually ask to see proof of adequate insurance to cover the re-building of the property and will inform you of how much cover you need.

Buy-to-let mortgage

This is a loan you take out to buy a property that you intend to let to tenants. Buy-to-let investors need to be aware that properties can fall in value as well as rise. You should always avoid borrowing more than a reasonable percentage of the overall value, and make sure that you budget for periods when you’re not receiving rental income.

Capital gains tax (CGT)

If the value of assets that you own increase in value, then you may need to pay Capital Gains Tax (CGT). For example, selling shares for more than you paid for them could involve paying some CGT. You get an annual allowance for capital gains and only pay CGT on any gain over this amount.

Capped mortgage

A capped mortgage is one with a maximum limit on the interest rate you'll have to pay during a special deal period.

Cashback mortgage

This is a mortgage that comes with a cash sum at the beginning of the mortgage loan.

Chancery

Chancery is a division of the High Court that deals in the administration of wills, probate and the execution of trusts.

Charity law

This is the law that governs charities, including how they raise funds, choose projects and account for the money they collect.

Child Trust Fund

The Child Trust Fund (CTF) is a long-term savings and investment account for children. In December 2010, the Government decided to stop opening CTFs, but those which had already been set up by then are designed to make sure that your children have savings up until the age of 18.

Children’s law

An area of law affecting children. It can include legislation concerning family law, education and asylum.

Clinical negligence

If you receive unreasonably poor medical treatment, which potentially gives rise to a personal injury claim against the medical professional or institution responsible, then you have ‘suffered from clinical negligence’.

Commercial litigation

This is the use (or threat) of court proceedings by one business against another in relation to a dispute.

Commercial property law

This is the law that governs any premises occupied for business use.

Commission

This is the payment that’s made to a financial adviser for services that he or she provides, based on a percentage of the value of the investment or premiums paid. It’s paid to the adviser by the product provider. If your adviser takes a commission, you may not need to pay any fees.

Common law

An area of law built upon principles taken from previous cases rather than created by statutes enacted by Parliament.

Computer and IT law

This is the law that governs the use of computers, including the Computer Misuse Act 1990.

Construction law

An area of law that governs the building of properties. It includes health and safety, dispute resolution and construction contracts.

Contents insurance

Contents insurance covers the cost of replacing possessions lost or damaged due to unforeseen events, as detailed in the insurance policy.

Contract

A contract is a written or spoken agreement between two parties. For a contract to be in force there needs to be an offer, an acceptance, and a means of consideration (which means that something of value, either an object, a service or money, passes between the parties, and each party gives and receives consideration). Each party expects to carry out certain acts in return for the other party carrying out other acts.

Contracting out

When you opt to leave the State Second Pension (S2P) or State Earnings Related Pension Scheme (SERPS), this is known as contracting out. You’ll receive a rebate on your National Insurance contributions, which can be invested in a pension fund.

Conveyancing

This is the process of transferring legal ownership of property from one person to another.

Conveyancing solicitors

A conveyancing solicitor is the one will help you to buy or sell a property and give advice during the conveyancing process.

Corporate bonds

These are Bonds that are issued by companies when they need to borrow money. As an investment, they often offer higher rates of return than banks and building societies but with a varying amount of risk depending on the financial security of the company issuing the bond.

Corporate finance law

This is the law that governs the ways companies can raise funds to finance their activities.

CPI

The Consumer Price Index (CPI) is a measure of inflation used by the British Government for its UK inflation target. It measures changes in a ‘basket’ of goods and services purchased by households.

Credit scoring

This is the system used by banks and other loan companies to judge whether you're creditworthy when you apply to borrow money.

Criminal law

This is the area of the law relating to the treatment of offences deemed to be illegal by the state. If you break a law that has been created by the state, then you are a criminal.

Critical illness cover

This is an insurance policy that you take out so that you can rely on having a lump sum paid if you're diagnosed with a specified critical illness.

Damages

This is the amount of compensation that’s paid by a losing party to the winning party in a litigation case

Debt

If you’ve borrowed money, then you are ‘in debt’, typically owing interest as well as the money initially borrowed.

Debt law

This is the area of law that governs the process of recovering debts from individuals.

Defamation

Defamation is the publication of a statement that lowers the estimation of an individual in the eyes of the public.

Defined benefit

In this type of pension scheme, members receive a set pension income on retirement – based on their final salary, how many years they’ve been working for the company. It’s also known as a final salary scheme.

Defined contribution

In this type of pension scheme, the amount of money you will have in your retirement fund depends on the amount of money you put in, where the money was invested and how much it grows. It’s also known as a money purchase scheme.

Direct Debits

These are payments that are made on a regular basis from your bank account on an agreed date. You arrange this with the company you’re paying, by giving them your bank details. For example, phone bills and utility bills are often paid by Direct Debit.

Disbursements

These are expenses that are incurred by the solicitor or other professional adviser on your behalf. They can include things like search fees in home purchases, medical reports in personal injury cases, any court or professional fees, or even their travelling expenses.

Discounted mortgage

A discounted mortgage is one with a discounted variable rate of interest for a set period, after which the rate may increase.

Diversification

This is the process of spreading – or ‘diversifying’ – your investments over a range of assets, so that you reduce your exposure to risk. By diversifying your investment, if one type of investment falls in value, then the remaining ones may not fall at the same rate, or at all.

Dividends

These are payments that are made to shareholders by a company from any profits that the business has made.

Early repayment charges

These are charges that you may have to pay if you break off a mortgage deal – by paying it back early and/or moving it to another lender.

Education law

This is the law that governs the manner in which education is provided and educational facilities operate.

Employment law

This is the area of law that governs the relationships between employers and employees. It includes things like harassment and unfair dismissal.

Employment law solicitors

An employment law solicitor can give an opinion on an employee’s position, prepare an application for an employment tribunal and represent the employee in the tribunal. Companies may also use employment law solicitors to advise them on employment and staff issues and to represent the employer side in tribunals.

Entertainment law

This area of law governs film, TV, music, theatre and other entertainment sectors, including intellectual property law, copyright and trademarks.

Environmental law

This area of law governs and promotes sustainable development and environmental protection.

Equity

This is a term that’s used to describe a company’s issued stocks and shares. If you own shares in a company you own some of the company's equity. It can also be used to describe the amount, or value, of your home that you own. If you ‘have equity’ in a property, it means that you own a portion of it above the value of any debts secured on that property, such as a mortgage.

Equity release

Equity release is the process of using the value of your home to raise cash – releasing the equity. There are two main types of equity release scheme available: lifetime mortgage (sometimes known as equity release mortgages) and home reversion schemes. When the property is sold, the plan provider reclaims their loan and any interest due with the remainder going towards the plan owner or to their estate.

Estate Planning

For inheritance tax (IHT) purposes, an individual's estate is calculated as being his or her total assets less any liabilities at the time of their death. Proper estate planning could save your family hundreds of thousands of pounds, because IHT (sometimes called ‘death duty’) will be charged on what you leave behind, over the IHT threshold at time of death. Currently, IHT is due at 40% of the value of all the assets you leave behind on death above the IHT threshold.

Ethical investment

Ethical investments are opportunities offered by businesses or funds that aim to avoid companies involved in some kinds of activities, but instead favour those involved in other activities. For example, companies trading in armaments, cigarettes, animal research or alcohol are unlikely to be considered ‘ethical’ – but a company that is highly committed to recycling or human rights issues, may be considered to have an ethical bias. Ethical investments can also be known as ‘green investments’ or ‘socially responsible investments’.

European Union law

This is the body of law that’s enacted by the European Union.

Executor

An executor is a person, named in a will, who is charged with administering the deceased person’s estate and distributing the assets to beneficiaries.

Family law

This is the area of law governing family relations, including matters concerning children, marriage, divorce and domestic violence.

Family law (divorce) solicitors

A family law solicitor tries to help you protect your rights on divorce and make sure you get the correct entitlement from a final divorce settlement. They’re sometimes known simply as ‘divorce solicitors’.

Fees

Fees are one of the ways you can pay your adviser for their advice and services. They’re usually fixed and agreed before the financial or legal advice and service is provided.

Final salary schemes

A final salary pension scheme is another description of a defined benefit scheme.

Financial and investment services

These are the services, often offered by solicitors and independent financial advisers, relating to investment of a client’s assets, such as following a divorce settlement or a grant of probate.

Financial Ombudsman Service

The Financial Ombudsman Service has been set up by law to help settle individual disputes between consumers and financial firms. It gives consumers a free, independent service to help resolve disputes, but you usually have to have first taken your complaint to the financial firm yourself before the Ombudsman can step in.

Fixed interest security

This is another name for a ‘bond’. The amount of interest you receive, when you invest in a fixed interest security, is stated at the time of purchase. These are usually regarded as a lower risk investment than stocks or shares.

Fixed rate

An interest rate that’s fixed is one that doesn't move up or down for a set period of time.

Fixed rate mortgage

Some mortgage lenders will offer a period of time, normally 2 to 5 years, during which the interest rate is fixed. After this time, it will revert to the Standard Variable Mortgage Rate (often referred to as SVR). Fixed rate mortgages can make budgeting for mortgage payments easier for borrowers in the first years.

Fraud

This is a term that’s used to describe various dishonest acts included in the Theft Acts of 1968 and 1978.

Free-Standing Additional Voluntary Contributions (FSAVCs)

This is a pension top-up policy for an occupational pension scheme, but it’s run alongside your employer’s pension scheme - usually by a pension company.

FSA

The Financial Services Authority (the FSA) is the UK's financial services regulator.

Gilts

These may also be called gilt-edged or Treasury bonds. They’re bonds that are issued by the UK government. They’re regarded as being very low-risk, secure investments because it’s the government that promises to pay you back.

Green Investments

This is another name for ‘ethical investments’, or ‘socially responsible investments’.

Group Personal Pension

If you work for a company, you may have a Group Personal Pension. It’s the name given to a group of personal pension plans offered by employers to employees.

Hedge fund

Hedge funds are a high risk investment: they comprise a complicated set of strategies that aims to make attractive returns on the stock markets.

Higher rate taxpayer

You are a higher rate tax payer if you are earning more than the higher tax rate threshold and are paying 40% income tax for the tax year.

Home reversion schemes

With a home reversion scheme, homeowners sell their home at a substantial discount of its value. They give up ownership and the right to any future increase in the property value, but they can continue to live in the property. These plans are available for those aged at least 70 and are for people who have nowhere else to go to obtain money.

Human rights law

This body of law was created by the Human Rights Act 1998. It gives UK citizens the fundamental rights and freedoms contained in the European Convention on Human Rights.

Immigration law

This is the area of law governing the right of non-EU citizens to residence in the UK.

Immigration solicitors

An immigration solicitor helps individuals deal with immigration matters, such as applications and appeals.

Income multiples

This is the factor by which your earnings are multiplied to find out how much you can borrow for a mortgage.

Income protection

This is an insurance policy that pays you a monthly income if you're unable to work due to illness or injury, until you are able to return to work, or you retire, whichever is the sooner.

Income tax

This is the tax paid on your income. Generally, all income is taxable. The exceptions are for income falling within personal allowances and income that’s generated from certain tax-efficient investments such as ISAs.

Independent financial adviser

Independent financial advisers (IFAs) are professionals who give financial advice about products and services across the whole market. They act on your behalf, and may charge a fee or be paid by commission.

Individual Savings Account (ISA)

There are two types of Individual Savings Account (ISA): Cash ISAs, and Stocks and Shares ISAs. Each tax year, you can put money into both types up to the annual limits. ISAs aren’t an investment in their own right, they’re a tax-free ‘wrapper’ in which you can shelter investments.

Inheritance tax (IHT)

Inheritance tax (IHT) is charged on an estate after a person’s death. It’s currently charged at 40% on amounts above the IHT threshold, which can change every year. A person's estate includes the total of everything owned, less any liabilities at the time of their death. If this amount is less than the threshold, no IHT is payable.

Injunction

An injunction is an order of the court that requires an individual or organisation to do or not do a specified act. For example, when a newspaper is ‘given an injunction’, they may be told not to publish a specific article or picture.

Insolvency

Insolvency is usually defined as a financial state in which a company can no longer pay its bills or other obligations on time. It happens when liabilities – or debts – are greater than assets and cash flow.

Insurance Premium Tax

Insurance premium tax (IPT) is a tax levied by the government on general insurance premiums. Most of the insurance premiums paid by UK consumers will include this tax – such as the insurance for your car, buildings and contents or private medical care. Some kinds of premiums like travel insurance are taxed at a higher rate. However most kinds of long-term insurance like life insurance or permanent health insurance are exempt from this tax.

Intellectual property

Anything that’s created by the intellect – with a commercial value, such as music, literary or artistic works or even computer code – is intellectual property.

Interest

When you give your money to a bank, to look after, you may receive an amount of money on top in return. That percentage is known as interest. You also have to pay interest on loans or mortgages when you borrow money.

Interest-only mortgage

With an interest-only mortgage, you only pay the interest charges on the loan each month. This means that you’re not reducing the loan amount (or capital) itself, which will need to be repaid in some other way. With a repayment mortgage, the loan is reduced to zero at the end of the term.

Joint life

A ‘joint life’ policy is one that’s taken out by two or more people. Joint life policies can be useful for protecting a family in the event of either or both parents dying.

Junior individual savings accounts (JISA)

Junior individual savings accounts (JISA) offer a choice of thousands of funds that can be held tax efficiently. Parents of children under 16 that do not have a Child Trust Fund can open a JISA in the child’s name.

Key facts document

All financial advisers must provide customers with at least two 'Key facts' documents: one explaining their status (whether they are tied, multi-tied or independent) and one explaining the services they offer and a menu of their charges. This helps you understand the value and cost of the adviser's advice and service. Comparing these documents is a good way to shop around.

Key features document

A ‘Key features’ document is one that all firms authorised and regulated by the FSA must give you to explain their services, or products, and details about anything that you’re interested in buying.

Landlord and tenant law

This is the area of law that governs the relationship between both landlords and tenants of residential and business properties.

Landlord and tenant law (property) solicitors

These solicitors are experts in landlord and tenant law. They can help individuals to draft tenancy agreements, explain obligations to tenants and help with eviction proceedings if this becomes necessary.

Legal aid (public funding)

This is a type of legal advice and representation for people on low incomes and may be means tested (particularly in Scotland). You don’t have to pay at the outset of the case, but it can be deducted out of any compensation. Legal aid applies slightly differently in Scotland than in England and Wales, and is not available for all types of law.

Libel

Libel is the act of publishing something about somebody that is not true and that causes them damage.

Lifetime allowance

This is the maximum amount of money that you can accumulate as pension savings throughout your lifetime and still benefit from tax relief. If the amount you save exceeds the lifetime allowance, then you will have to pay tax on these savings.

Lifetime annuity

A lifetime annuity will give you a regular income for the rest of your life. You buy an annuity with the cash sum that’s built up in your pension fund, so that you can have a regular income during retirement. There are different types of annuities to suit your needs and circumstances.

Lifetime mortgages

These are also known as ‘equity release mortgages’. They’re products that release a share of the equity in your property and put a mortgage into place, to repay the amount of money that’s been released. A lifetime mortgage is different from a traditional mortgage: the interest charged is ‘rolled-up’, so that borrowers never have to make monthly mortgage repayments. The minimum age of the youngest borrower is usually 55. The older the borrower, the higher the portion of the equity of the home may be borrowed. This tends to be in the region of 15% of the property value at age 55, rising to a maximum of 55% at age 85.

Liquor licensing and gaming law

This is the law that governs the granting of licences to premises where alcohol is to be sold or gambling is to take place.

Litigation

Litigation is the use or threat of court proceedings.

Loan-to-value (LTV)

This is the percentage of mortgage money you want to borrow compared to the cost of a property. If the LTV exceeds a stated amount, then some mortgage lenders will charge a higher rate of interest or impose some other penalty to accept the higher risk.

Loans

A bank loan is a set amount of money that a company agrees to lend you for a set period of time. Payments and interest rates are agreed at the time of the loan.

Media law

This is an area of law that governs the entertainment, publishing and other media sectors, including intellectual property law, copyright and trademarks.

Mediation

Mediation is the process that parties enter into in an attempt to resolve a dispute without court proceedings. It’s usually undertaken in the presence of a ‘mediator’ – someone with a neutral opinion who can voice the issues of both parties.

Mental health law

This is the area of law that governs the treatment and classification of mental patients under the Mental Health Act 1983.

Military law

Military law is the system of regulation that governs the UK’s armed forces.

Money laundering

The government has introduced tough money laundering laws in a bid to combat international crime and terrorism. This means that solicitors and other professionals need to check that you are who you say you are when you first instruct them. They may also ask for proof of identity if you have not instructed them for some time. Usually, identity is provided with a form of photographic document – such as your passport.

Money purchase pension

Occupational pensions, personal, group personal, stakeholder, Free Standing Additional Voluntary Contributions (FSAVCs) and Additional Voluntary Contributions (AVCs) can be called money purchase pensions. You can choose where your contributions are invested. The size of your fund depends on your contributions, over what time period you invest them, and how well your investments grow.

Mortgage

A loan to buy a property, which is then ‘secured’ on the property. This means that the lender may eventually have the right to take over the property if you do not keep up with the terms of the mortgage.

Mortgage broker

A mortgage broker can recommend a mortgage for you or they can give you information that helps you make your own choice. Mortgage brokers can be independent, or have a restricted range of mortgages available to them. Remember to ask a mortgage broker what his or her status is.

Mortgage protection insurance

Accident, sickness and sometimes unemployment insurance (or payment protection insurance) is a policy that’s used to help pay for your mortgage if your income is reduced due to certain circumstances.

Multi-tied financial advisers

A multi-tied financial adviser can offer you a choice of products from a limited range of financial companies.

National Insurance contributions

National Insurance (NI) contributions are an amount of money that’s paid to the Government a percentage of your income if you are aged over 16 but under the pension age (currently 60 for women, 65 for men) and you earn more than the minimum threshold. They go towards providing for state pensions, as well as other state-provided benefits. If you are an employee, NI is deducted from your pay before it is paid to you.

Neighbour disputes

Legal disputes between neighbours, often related to noise, threats of violence or obstructed access to property.

Non-taxpayers

If you don’t pay tax because your income is below the personal allowance threshold, then you can choose to receive gross interest (interest without tax deducted). Remember, the interest from investments could take you over the threshold. You can also reclaim any overpaid tax provided you make your claim within set time limits, usually around six years. If you want to receive your interest gross, you should complete Tax Form R85, which you can pick up from your bank, building society or savings provider, or find at www.hmrc.gov.uk/taxback/forms.htm

Payment protection insurance

This type of insurance policy pays a regular pre-agreed amount for a stated time if you can't work for specified reasons.

Pensions law

An area of law governing the payment and the protection of pensions.

Personal allowance

A personal allowance is the amount of income that you can earn each year before you start paying tax.

Personal Equity Plans (PEPs)

From April 2008, Personal Equity Plans automatically became Stocks and Shares ISAs (see the glossary definition of Individual Savings Account).

Personal injury law

An area of law that governs claims for compensation where one party has caused physical injury to another.

Personal injury solicitors

A personal injury solicitor will help you negotiate for personal injury compensation.

Personal pension

This is a pension policy that’s taken out through a pension company, into which you pay contributions and will at retirement provide some or all of your pension income. These are invested in funds, which you can choose according to your attitude to risk and plans for the future. A personal pension is set up on a money purchase (defined contribution) basis.

Planning law

This area of law governs the processes involved in getting planning permission for the erection or change of use of buildings.

Premium

This is the name given to the regular amount you must pay for an insurance policy. Providers sometimes offer annual premiums, but most commonly premiums are paid monthly, although some companies charge interest on these arrangements and it is worth checking how much extra you may have to pay.

Price to earnings ratio (P/E)

The performance of companies is measured by their Price to Earnings (P/E) ratio. The price is the current share price, and the earnings are the profit that the company earns in one financial year for each single share.

Private medical insurance

This is a type of insurance policy that pays for you to receive private medical treatment. It’s also known as private health insurance.

Probate

Probate is the process of obtaining legal authority to deal with the affairs of someone who has died and getting the will certified so that the executors can carry out the wishes and instructions contained within it in order to wind up the estate.

Professional negligence

This area of law covers claims against any professional whose work has not met the standards that can reasonably be expected. Medical professionals, surveyors, architects, accountants, solicitors, financial advisers, builders, plumbers – these kinds of profession run the risk of professional negligence.

Property

Property is a type of asset. Property assets can be residential - such as your house – or commercial, such as offices and shops.

Protected rights pension

This is the part of your pension fund that has been built up due to redirection of national insurance contributions.

Qualifying years

Qualifying years are those tax years in which you’ve paid a certain amount of National Insurance contributions. A minimum number of qualifying years must be built up during your working life to qualify for the full basic state pension.

Repayment mortgage

This is a mortgage that pays off both the capital and the interest at the same time. Pay all the repayments and the mortgage will be fully repaid at the end of the term.

Risk

Some investments are riskier than others. For example, an investment in the stock market is riskier than money put into savings accounts – there’s more chance of something going wrong and you losing money. Riskier investments tend to offer potentially higher returns as compensation for the risks involved.

RPI

The Retail Prices Index (RPI) measures the change in the cost of a basket of retail goods and services.

Self Invested Personal Pensions (SIPPs)

A Self Invested Personal Pension is a type of plan that allows you, or your appointed fund manager, to make choices from a wider range of investments than other personal pension schemes offer. With a SIPP you can invest in the shares of any company listed on a stock exchange.

Solicitor

A professional who provides legal advice and services to individuals and businesses on a wide range of issues, for example divorce, conveyancing, contract law and employment law.

Stakeholder Pension

This is a personal pension in its most simple form. A stakeholder pension will allow you to make a minimum investment of £20 per month and offer a range of funds in which to invest – and there must be no penalties for transferring away from the fund. Your employer may offer access to a stakeholder pension scheme.

Stamp duty

This is a tax that’s levied on the transfer of certain kinds of assets: it’s imposed by HMRC, who need to ‘stamp’ documents to complete the purchase of such assets. Home buyers must pay stamp duty on properties with a value that’s above a set figure. Anyone buying shares also needs to pay stamp duty.

Standard variable rate mortgage

This is a loan that’s arranged at the lender's normal mortgage rate without any discounts or deals.

State Pension

Your basic State Pension is based on your National Insurance contributions. You may also qualify for the additional State Second Pension if you are employed, based on your earnings and National Insurance contributions.

State Second Pension

The State Second Pension is an additional pension that’s paid on top of your basic State Pension. It was called SERPS until 2002. Self-employed people are not entitled to a State Second Pension.

Stockbroker

A stockbroker is a professional who buys and sells stock (shares) on behalf of clients. Only registered stock brokers can buy or sell shares on the stock exchanges.

Stocks and Shares

Both terms mean the same thing: companies’ stocks and shares that can be bought and sold. Owning a share in a company means owning a part of that company, or owning some of that company's stock.

Sub-Prime

If a mortgage borrower has a poor credit record, such as County Court Judgments (CCJs) or bankruptcy, they can find sometimes a loan from Sub-Prime lenders. However, borrowers can expect to pay interest rates that are higher the normal lending rate because lenders see them as being riskier.

Tax credits

Tax credits are payments made by the government. Usually, they’re made to people on low incomes, to families with children, or to registered carers.

Tax Exempt Special Savings Account (TESSA)

From April 2008, TESSAs automatically became ISAs.

Tax-efficient investing

Tax-efficient investing is the process of investing in such a way as to minimise the amount of tax paid. This could mean using tax-efficient investments such as ISAs, or making contributions to your pension.

Taxation law

This area of law governs the payment and evasion of tax due to Her Majesty’s Revenue & Customs.

Term

This is the length of the contract you make with your mortgage, policy or investment provider.

Term assurance

This is a policy that provides a guarantee to pay a specific amount of money, during a pre-agreed period of time, if you die. It’s also known as Life Assurance.

Tied financial advisers

A tied financial adviser can only offer advice on the products of one provider.

Tracker mortgage

This is a mortgage that has a level of interest rate linked to a particular rate, set independently from the lender. The level of interest you’ll pay will move up and down, as the rate moves up or down.

Travel insurance

This type of policy usually pays out if you unexpectedly have to cancel your holiday; are taken ill while away; accidentally injure somebody or damage somebody else's possessions; or if you lose your own possessions. Different levels of cover are available to protect you whilst you travel, and costs can vary depending on where you travel to and how long you plan to be away – or you can choose to buy annual or multi-trip insurance.

Trusts law

This type of law governs the creation and maintenance of trusts, such as those used to protect family assets through the generations.

Unit trusts

These are ‘open-ended’ investments in which the underlying value of the assets is directly calculated by the total number of units issued multiplied by the unit price less the transaction or management fee charged and any other associated costs. There are many different unit trusts available, all investing in different assets.

Unsecured pension

An unsecured pension is a way of taking an income from your pension fund up to age 75, while leaving the rest of your fund invested. It does involve incurring some risk to the value of your pension fund. There are two types of unsecured pension – a short-term annuity and income withdrawal.

Valuation

This is an inspection, for the benefit of your lender, of the home you hope to buy. This is to reassure them they are not lending more than the property is worth and that the property is suitable security for the mortgage, but it won’t tell you if the building is a good or bad buy. For your own peace of mind and to get an understanding of the physical condition of the property you are planning to take on, you may want to organise your own in-depth, structural survey, particularly on an older property.

Variable interest rate

These are interest rates, offered by banks and financial institutions on loans or deposits, that may change according to circumstances. For example, a movement in the interest base rate set by the Bank of England would usually be an influence.

Welfare benefits law

Welfare benefits law governs the payment of welfare benefits to individuals.

Whole-of-life insurance

A whole-of-life insurance policy lasts throughout your life so that your dependants are guaranteed a payout should you die as long as the premiums are kept up.

Wills and probate Law

This is the area of law that governs the interpretation of wills and the distribution of the estate of people who have died.

Yield

Yield is a general term for the rate of income that comes from an investment, expressed as an annualised percentage and based on its current capital value.