Glossary
UK accounting and tax glossary
Plain-English definitions of the accounting and tax terms UK company directors, sole traders and landlords come across, from annual accounts to VAT. Every definition was checked against GOV.UK, HMRC and Companies House guidance in September 2026, and each one links to the SmartFiling guide or service that covers it in more depth.
Reviewed by Krishna Prasad Dahal FCCA, ACA (ICAEW), FCA (ICAI India)ICAEW Council Member · Last reviewed
91 terms
Recently added Full Payment Submission VAT reverse charge Input and output VAT Limited cost trader Property income allowance Class 4 National Insurance
Terms starting with A
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Abridged accounts
Abridged accounts are a shortened form of small company accounts in which some balance sheet lines, and optionally some profit and loss lines…
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Accounting period
An accounting period is the period covered by a company's Company Tax Return (CT600) and used to calculate its Corporation Tax.
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Accounting reference date
The accounting reference date (ARD) is the date a company's financial year ends each year, often called its year end.
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Accruals
An accrual is a cost that belongs to a company's financial year but has not been invoiced or paid by the year end…
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Annual accounts
Annual accounts, also called statutory accounts, are the financial statements a UK limited company prepares at the end of each financial year.
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Annual Investment Allowance
The Annual Investment Allowance (AIA) is a capital allowance that gives 100% tax relief on qualifying plant and machinery, such as computers, tools, machinery and vans…
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Associated companies
Companies are associated for Corporation Tax if one controls the other or both are controlled by the same person or group of persons…
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Audit exemption
Audit exemption allows a qualifying small company, including a micro-entity, to file annual accounts that an independent auditor has not checked.
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Authorised corporate service provider (ACSP)
An authorised corporate service provider (ACSP), also called a Companies House authorised agent, is a business or sole trader registered with Companies House to verify…
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Auto-enrolment
Auto-enrolment (automatic enrolment) is the legal duty for UK employers to put eligible workers into a workplace pension and pay contributions.
Terms starting with B
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Balance sheet
A balance sheet is a snapshot of a company's finances on the last day of its financial year.
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Bona vacantia
Bona vacantia means "vacant goods", the legal term for ownerless property that passes to the Crown.
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Bookkeeping
Bookkeeping is the day-to-day recording of a business's financial transactions, such as sales, purchases, receipts, payments and bank movements…
Terms starting with C
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Called up share capital not paid
Called up share capital not paid is a balance sheet line showing share capital that shareholders owe the company but have not yet paid.
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Capital allowances
Capital allowances are the tax relief a UK business gets when it buys equipment, machinery, vans and other assets it keeps to use in the business…
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CATO
CATO (Company Accounts and Tax Online) was HMRC's free online service for filing a company's accounts and Company Tax Return (CT600) with HMRC.
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CIS deductions
CIS deductions are the amounts a contractor withholds from a subcontractor's labour payments under the Construction Industry Scheme and pays to HMRC.
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Class 4 National Insurance New
Class 4 National Insurance is paid by self-employed people on their taxable profits and collected by HMRC through Self Assessment, alongside Income Tax.
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Close company
A close company is, broadly, a UK company controlled by five or fewer shareholders (called participators), or by any number of participators who are also directors.
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Companies House
Companies House is the UK's registrar of companies, an executive agency sponsored by the Department for Business and Trade.
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Companies House authentication code
The Companies House authentication code is a six-character code of letters and numbers that Companies House issues to every company.
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Companies House late filing penalty
A Companies House late filing penalty is an automatic civil penalty charged to a company whose annual accounts arrive after the filing deadline.
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Companies House personal code
A Companies House personal code is the unique 11-character code a person receives after verifying their identity for Companies House.
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Company director
A company director is a person appointed to run a limited company and make sure it meets its legal obligations.
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Company restoration
Company restoration brings a dissolved company back onto the Companies House register.
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Compulsory strike-off
Compulsory strike-off is when Companies House removes a company from the register because it has reason to believe the company is no longer carrying on business…
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Confirmation statement
A confirmation statement (form CS01) is the filing in which a company confirms that the information Companies House holds about it is correct, such as its officers…
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Construction Industry Scheme
The Construction Industry Scheme (CIS) is HMRC's scheme for payments in the construction industry.
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Corporation Tax
Corporation Tax is the tax UK limited companies pay to HM Revenue and Customs (HMRC) on their taxable profits.
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Corporation Tax computation
A Corporation Tax computation is the working that shows how a company gets from the profit in its accounts to its taxable total profits and Corporation Tax bill.
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CT600
The CT600 is the Company Tax Return a UK company files with HM Revenue and Customs (HMRC) for each accounting period.
Terms starting with D
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Digital records
Digital records are the business records that Making Tax Digital (MTD) requires to be kept in software rather than on paper.
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Director's loan account
A director's loan account (DLA) is a limited company's record of money moving between a director and the company other than salary, dividends or repaid expenses.
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Dividend allowance
The dividend allowance is the amount of dividend income an individual can receive each tax year without paying dividend tax. For 2026/27 it is £500.
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Dividend voucher
A dividend voucher is the written record a limited company gives a shareholder each time it pays a dividend.
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Dormant company
A dormant company is a limited company that is not active, but Companies House and HMRC use different tests.
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Dormant company accounts
Dormant company accounts are the simplified annual accounts a dormant company files at Companies House, normally a balance sheet with a few notes and no profit and loss…
Terms starting with E
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Economic Crime and Corporate Transparency Act (ECCTA)
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) is the UK law reforming Companies House and the information companies must file.
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Employer National Insurance
Employer National Insurance (secondary Class 1 National Insurance contributions) is the amount a company pays HMRC on top of the salaries it pays employees and directors.
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Employment Allowance
Employment Allowance lets eligible employers cut their employer Class 1 National Insurance bill by up to £10,500 each tax year…
Terms starting with F
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Filleted accounts
Filleted accounts is the informal name for a small or micro company's accounts filed at Companies House without the profit and loss account…
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Flat Rate Scheme
The VAT Flat Rate Scheme is an HMRC scheme that lets a small VAT-registered business pay HMRC a fixed percentage of its VAT-inclusive turnover…
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FRS 105
FRS 105 is the UK accounting standard for companies that use the micro-entities regime.
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Full Payment Submission New
A Full Payment Submission (FPS) is the Real Time Information report an employer sends HMRC on or before each payday.
Terms starting with G
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Identity verification
Identity verification is the legal requirement, in force since 18 November 2025, for company directors and people with significant control (PSCs)…
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Input and output VAT New
Output VAT (output tax) is the VAT a VAT-registered business charges on its sales. Input VAT (input tax) is the VAT it pays on goods and services bought for the business.
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IR35
IR35, also called the off-payroll working rules, applies when a contractor works for a client through an intermediary, usually their own limited company…
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iXBRL
iXBRL (inline eXtensible Business Reporting Language) is a digital format that adds machine-readable tags to each figure in a set of accounts while keeping the document…
Terms starting with L
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Late payment interest
Late payment interest is the interest HM Revenue and Customs (HMRC) charges when tax is paid after its due date, including Corporation Tax, VAT and Self Assessment.
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Limited cost trader New
A limited cost trader (HMRC calls it a "limited cost business") is a business on the VAT Flat Rate Scheme whose spending on relevant goods, including VAT…
Terms starting with M
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Making Tax Digital
Making Tax Digital (MTD) is HMRC's programme requiring businesses to keep digital records and send tax information to HMRC through compatible software.
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Marginal Relief
Marginal Relief is a reduction in Corporation Tax for companies with profits between £50,000 and £250,000.
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Members' voluntary liquidation (MVL)
A members' voluntary liquidation (MVL) is a formal process for closing a solvent limited company, run by a licensed insolvency practitioner acting as liquidator.
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Micro-entity
A micro-entity is the smallest category of UK company under company law.
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Micro-entity accounts
Micro-entity accounts are the simplified annual accounts that a company qualifying as a micro-entity can prepare under the accounting standard FRS 105.
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MTD for Income Tax
MTD for Income Tax (Making Tax Digital for Income Tax) requires sole traders and landlords with qualifying income above a threshold to keep digital records…
Terms starting with N
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P11D
A P11D is the form an employer sends HMRC after each tax year to report taxable benefits in kind and expenses given to employees and directors, such as a company car…
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PAYE (Pay As You Earn)
PAYE (Pay As You Earn) is HM Revenue and Customs' (HMRC) system for collecting Income Tax and National Insurance from employment income…
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Payments on account
Payments on account are two advance payments towards your next Self Assessment tax bill, due by 31 January and 31 July.
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Person with significant control (PSC)
A person with significant control (PSC) is someone who owns or controls a UK company, sometimes called a beneficial owner.
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Pre-trading expenses
Pre-trading expenses are business costs incurred in the seven years before a trade starts, such as market research, advertising or professional fees.
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Profit and loss account
The profit and loss account (P&L, also called the income statement) shows a company's income, costs and resulting profit or loss for its financial year…
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Property income allowance New
The property income allowance (often called the property allowance) is a £1,000 tax-free allowance each tax year for individuals with income from land or property…
Terms starting with Q
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Real Time Information
Real Time Information (RTI) is the way employers report payroll to HMRC under PAYE.
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Registered office address
A registered office address is a company's official address on the Companies House register, where Companies House, HMRC and others send formal post…
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Retained earnings
Retained earnings are the profits a company has built up since it started, after Corporation Tax, less all the dividends it has paid.
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SA302
An SA302 is HMRC's tax calculation for a single tax year, showing the income declared on a Self Assessment return and the Income Tax worked out on it.
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Section 24
Section 24 is the common name for the rule that stops individual landlords deducting mortgage interest and other finance costs from residential rental income.
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Section 455 tax
Section 455 tax (s455) is a temporary charge, paid like Corporation Tax, on close company loans to participators, usually director-shareholders…
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Self Assessment
Self Assessment is the system HM Revenue and Customs (HMRC) uses to collect Income Tax that is not taken automatically, for example through PAYE.
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Share capital
Share capital is the amount shareholders have paid, or agreed to pay, a company for their shares, recorded at the shares' nominal (face) value.
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SIC code
A SIC (Standard Industrial Classification) code is a five-digit code that describes what a company does.
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Small company accounts
Small company accounts are annual accounts prepared under the small companies regime, normally using the accounting standard FRS 102 Section 1A.
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Small profits rate
The small profits rate is the 19% rate of Corporation Tax for companies with profits of £50,000 or less in a 12-month accounting period.
Terms starting with T
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Taxable total profits
Taxable total profits are the profits on which a UK company pays Corporation Tax for an accounting period.
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Time to Pay arrangement
A Time to Pay arrangement is a payment plan agreed with HM Revenue and Customs (HMRC) that lets a business or individual pay an overdue tax bill…
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Total exemption full accounts
"Total exemption full" is the label Companies House shows in a company's filing history when a small company has filed full accounts…
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Trading allowance
The trading allowance is a £1,000 tax-free allowance each tax year for income from self-employment, casual work and side hustles…
Terms starting with U
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Unique Taxpayer Reference (UTR)
A Unique Taxpayer Reference (UTR) is the 10-digit number HM Revenue and Customs (HMRC) gives each taxpayer.
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Unlawful dividend
An unlawful dividend (often called an illegal dividend) is a dividend a limited company pays when it does not have enough profits available for distribution to cover it.
Terms starting with V
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VAT penalty points
VAT penalty points are HMRC's points-based system for late VAT returns, used for accounting periods starting on or after 1 January 2023.
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VAT registration threshold
The VAT registration threshold is the level of VAT-taxable turnover at which a UK business must register for VAT with HMRC. It is £90,000.
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VAT return
A VAT return is the report a VAT-registered business sends to HMRC, usually every three months, showing how much VAT it charged on sales (output VAT)…
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VAT reverse charge New
The VAT reverse charge is a rule that makes the customer, not the supplier, account for VAT on certain supplies.
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Voluntary strike-off
Voluntary strike-off is the way directors close a limited company they no longer need, by applying to Companies House on form DS01 (£13 online)…
Terms starting with W
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