B definitions
| backwards or forwards spreading | A tax relief which enables authors and artists to spread their income forwards or backwards. It recognises the time taken to complete the work giving rise to the income. You may spread income back for two years if it took you between one and two years to create the work, or back for three years if it took more than two years to create. Forwards spreading may apply if you receive a lump sum instead of future annual royalties. |
| bad debts | If a customer of a business fails to pay the bill for goods or services received, the unpaid amount is a "bad debt". Although the sale is included in the declared turnover, the bad debt is an allowable expense. Where tenants fail to pay rent due, the bad debts are allowable rental expenses. |
| balancing allowances | A type of capital allowance that may be given if you sell an asset for less than its tax written down value. Balancing allowances are not given on items of plant that are included in the general capital allowances pool until the business ceases. |
| balancing charge | Withdrawal of some or all of the capital allowances previously given. They arise when fixed assets stop being used in your business. Balancing charges may be made on the general capital allowances pool if the proceeds of sale of pooled assets exceed the tax written down value of the whole pool. |
| bank | An approved company that accepts monetary deposits or loans money. In the UK, the Bank of England approves all banks. |
| bank charges | Charges raised by a bank for the day to day running of your bank account such as overdraft charges, charges levied on the number of cheques issued and so on. |
| bare trust | Bare Trust is a term used to describe a situation where one party (party A) holds an asset (such as shares) on behalf of another party (party B). However apart from being the named holder (nominee) party A has no beneficial right to the asset and must exercise control for the benefit of or on the instruction of party B. The income arising on the asset is taxed as part of party B's taxable income, and any capital gains as part of party B's capital gains. |
| base rate | Most interest rates are linked to the Base Rate. The Bank of England meets monthly to decide what the base rate should be set at. The base rate determines how much other banks and building societies pay for loans they take out from the Bank of England. These base rates in turn affect the interest rate you pay for loans. |
| basic rate tax | For 1999/2000, the basic rate of income tax is 23%. You pay tax at the starting rate (10%) on the first 1,500 of your taxable income (the starting rate band), at the basic rate (23%) on any income between £1,500 and £28,000 (the basic rate band), and tax at the higher rate (40%) on any income in excess of £28,000. However, you do not pay basic rate tax on savings income, such as interest and dividends. To the extent that your interest from banks or building societies falls within the basic rate band it is taxed at the savings rate of 20% instead of the basic rate. To the extent that your dividend income falls within the basic rate band it is taxed at the savings rate of 10%. To the extent that dividend income falls into the higher rate band it is taxed at 32.5%. |
| basis of accounting - accruals | The method of accounting which adjusts for accruals at the beginning and end of the accounting period, so that the income included in the accounts is that earned during the accounting period, and the expenses are those incurred during the accounting period. For example you should include sales you have made but which you have not yet been paid for, and the cost of electricity which you have used but have not paid for, even if you have not yet been billed for it. |
| basis of accounting - cash | The method of accounting which only includes income actually received during the accounting period and expenses actually paid during the accounting period. Some businesses use a modified cash basis, including income when it is received, but including expenses on an accruals basis. You may not use the cash basis for accounting periods beginning on or after 7 April 1999. |
| basis period | The period used to identify the profits taxable in any particular tax year. Normally the Basis Period is the same as the accounting period, but special rules apply in the first three tax years of trading, on a change of accounting date, and on cessation. |
| beneficiary | Someone who receives a benefit from someone or something. Most commonly used to refer to a person who receives income or capital from a trust, or from the estate of a deceased person. |
| benefits (from employment) | Part of your remuneration package paid not in cash, but in kind. Includes the use of company assets such as company cars, low interest loans and so on. |
| benefits (State) | Benefits which the Government pays to certain individuals in certain situations.. Examples are jobseeker's allowance, incapacity benefit, disability benefits and so on. |
| Benefits Agency | An agency belonging to the Department of Social Security which is responsible for calculating entitlement to, and for paying, state benefits such as Income Support and so on. |
| blind person's allowance | An extra allowance you are entitled to if your sight has failed and you are registered as blind (registers do not exist in Scotland or Northern Ireland). |
| bonus | An extra reward paid by employers to employees either at a certain time of the year such as at Christmas, or in recognition of a good performance. The bonuses can be anything from cash to a holiday or a valuable asset. |
| bonus issue | A free issue of shares to existing shareholders in proportion to their existing shares. This is the same as a Scrip Issue, but is not the same as a scrip dividend. |
| books, magazines, reference sources | If you are self employed, the cost of books, magazines and reference sources are tax deductible provided they are used for business purposes. If you are employed by a third party, it is very difficult to get tax relief as they must be bought "wholly, exclusively and necessarily" in the performance of the employment. |
| branch sort code | Used by the bank to identify which branch of that bank holds your account. It is a series of 6 numbers, which are normally found in the top right hand corner of your cheques. |
| building society | Similar to a bank but owned by members of the building society rather than shareholders in a company (bank). |
| business | Broadly, you are in business if you are trading with a view to making a profit. There are criteria to differentiate between a business and a hobby. If in doubt, contact the Inland Revenue, accountant or Tax Adviser. |
| business expenses | Expenses of a business incurred in earning the profits of the business. Not all business expenses are allowable for tax purposes. |
| business income | Income derived by the business from sales, fees and so on. |
| business losses | Losses made by a business where business expenses exceed business income. You need to adjust business losses to arrive at allowable losses for tax purposes. |
| business start-up allowance | A government benefit paid to assist unemployed people in setting up their own business. Payments are taxable. Now more commonly known as Enterprise Allowance. |
| business travel | Travel between places of work, or to a place of work to carry out duties there, but excluding private travel and ordinary commuting. |
This page was last reviewed on 07 July 2004. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
