I definitions
| ICTA | Acronym for the Income and Corporation Taxes Act 1988. |
| IFA | Acronym for Independent Financial Adviser. You may need to use an IFA to help with your general financial planning along with pension options. |
| incapacity benefit | A government benefit paid if you are unable to work due to an accident or illness. |
| income | Something you receive from working (past or present), from assets you own such as shares, or a government benefit paid to you. |
| income bearing asset | An income bearing asset is one which gives you an income, such as shares which pay dividends, land which pays rent, and so on. |
| income for tax purposes | Income which is liable to tax. Some forms of income are tax free, such as winnings from gambling (providing you are not a professional gambler) or the National Lottery. |
| income from employment | The earnings you receive from your office (directorships and so on) or employment. It includes salary, commissions as well as benefits provided by your employer (company car and so on). |
| income from estates of deceased persons | Income paid to a beneficiary by the executors of the estate of a deceased person. The executors are in charge of administering the assets of the estate, and distributing the income they have received from those assets to the beneficiaries of the estate. |
| income limit | For some reliefs and allowances there is a limit to the amount of the relief or allowance that you can claim which is related to the amount of your taxable income. This applies, for example, if you are aged 65 or over. Your age related allowances will be restricted if your total income exceeded £16,800 in 1999/2000. |
| income tax | A tax on the income you receive. For 1999/2000, there are five different rates of income tax (10%, 20%, 23%, 32.5% and 40%) based on how much income you earn and from what source. |
| independent financial adviser | An independent financial adviser is someone who can give you advice about a wide range of financial products. They must be authorised to give advice, and are regulated by the Personal Investment Authority. They must be distinguished from tied financial advisers, who can only give advice on investment products offered by a specific company. |
| independent taxation | Since 6 April 1990, husbands and wives have been taxed separately. |
| indexation allowance | An allowance which reduces the taxable element of gains to allow for the rate of inflation. The indexation allowance has been frozen at 5 April 1998 and replaced by taper relief. |
| indexed gain/loss | The profit and loss on the sale of an asset after adjusting for indexation. Since 30 November 1993, it is not possible for indexation to create, or enhance, a loss. |
| individual savings account | A tax free investment vehicle available from 6 April 1999 which allows you to invest in stocks and shares and life assurance policies, or to hold cash. It replaces personal equity plans (PEPs) and TESSAs. The income and gains will be tax free. There is no minimum holding period in an ISA to qualify for tax relief, but amounts of capital withdrawn cannot be replaced except by using a further years ISA allowance. |
| industrial death benefit pension | A benefit paid by the Department of Social Security to a widow if her husband dies as a result of an accident at work or from a "prescribed industrial disease". This benefit was abolished for deaths occurring on or after 11 April 1988. |
| inheritance | Something you receive from a deceased relative or friend. Inheritances are received free of income tax and capital gains tax and should not be entered on your Tax Return. |
| inheritance tax | A tax payable on your assets when you die. No inheritance tax is payable if your total assets, including your home, are worth less than £231,000. This figure changed in the March 2000 Budget to £234,000. If your assets are worth more than £234,000, 40% tax is payable on the excess over £234,000. Some lifetime gifts may be liable to inheritance tax, although gifts you make to another individual are free of inheritance tax if you do not die within seven years of making the gift. |
| Inland Revenue | The government department which controls the collection of income tax, capital gains tax, inheritance tax and so on. From 6 April 1999 the Contributions Agency (which dealt with the collection of national insurance contributions) has become an Inland Revenue department, (the National Insurance Contributions Office). |
| insurance payouts | Something you receive following the maturity of an insurance policy or a claim for theft, fire, or loss of profits and so on due to a catastrophe. |
| insurance premiums | Something you pay to cover yourself against a negligence claim, loss of profits due to a catastrophe or damage (or destruction) to your assets. |
| interest | Money you pay on a loan or receive if you have cash deposits. Note that personal overdraft interest or credit or charge card interest is not tax deductible. |
| interest distribution | Payments by a company or unit trust in the form of interest rather than as a dividend distribution. Your tax voucher will specify the nature of the distribution. |
| interest on loans to buy your main home | In 1999/2000 you still receive tax relief on the interest you paid on these loans (up to a maximum loan of £30,000). This relief has been abolished from 6 April 2000. In 1999/2000 tax relief was given at the rate of 10%, and was normally given through the MIRAS scheme. Your main home is the place you generally live, not your second home or holiday cottage. |
| interest on other qualifying loans | You can receive tax relief on interest paid on certain loans. These include loans for buying shares in a close company, purchasing an interest or introducing capital in a partnership, paying inheritance tax and purchasing machinery or plant. |
| intestacy | If a person dies without leaving a will, the assets of the deceased's estate pass under the intestacy rules. These vary according to whether or not there is a surviving spouse, or surviving children, parents, brothers and sisters and so on. If a person's will does not deal with all of the assets of the estate, there may be a partial intestacy. The rules of intestacy in Scotland differ from the rest of the UK. |
| invalid care allowance | This allowance is paid if you spend at least 35 hours per week caring for a disabled person who receives certain state benefits. It will not be paid if you are also working and earning over the means tested limit. |
| investment income | Income generated from assets such as shares, land and property, cash deposits and so on. |
| investment trust | An investment trust is a company which invests in a spread of equities or fixed interest securities. You can buy shares in the investment trust. The shares are publicly quoted, and their price will vary according to the value of the underlying investments owned by the investment trust. |
| investments | Assets you buy either to profit from or to own for a long time. These can include shares, land and property, a pension or your home. |
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.
