- Accrued interest
- Interest built up on a bond since its last coupon date. The buyer pays it to the seller on top of the clean price.
- Active fund
- A fund whose manager picks investments aiming to beat a benchmark. Usually charges more than an index fund.
- Additional-rate taxpayer
- Someone with taxable income over £125,140 (2026/27, rest of UK).
- AER
- Annual Equivalent Rate – the interest you'd earn over a year if interest were compounded, so you can compare accounts that pay interest at different intervals.
- Amortisation
- Paying off a loan gradually through regular payments that cover interest and part of the capital.
- Annual allowance
- The most that can be paid into your pensions each tax year with tax relief – £60,000 for most people in 2026/27.
- Annuity
- A product that turns a pension pot into a guaranteed income, usually for life.
- Arrangement fee
- A fee some lenders charge to set up a mortgage deal.
- Auto-enrolment
- The legal duty on employers to put eligible workers (aged 22 to State Pension age, earning over £10,000 a year) into a workplace pension.
- Bank Rate
- The Bank of England's main interest rate, set by its Monetary Policy Committee. It influences savings and mortgage rates.
- Basic-rate taxpayer
- Someone whose taxable income falls in the basic-rate band (£12,571 to £50,270 in 2026/27 for most people, rest of UK).
- Battery degradation
- The gradual loss of a battery's usable capacity as it ages and is cycled.
- Benefit in kind (BIK)
- A taxable perk from your employer, such as a company car. Tax is based on a percentage of the car's list price – 4% for zero-emission cars in 2026/27.
- Bond
- A loan to a government or company that pays interest and returns your money at a set date.
- Capital Gains Tax (CGT)
- Tax on the profit when you sell certain assets for more than you paid. The annual exempt amount is £3,000 in 2026/27. Gilts are exempt.
- Cash ISA
- An ISA holding cash savings. Interest is tax-free.
- Clean price
- A bond's quoted price, excluding accrued interest.
- Collar
- A minimum rate below which a tracker mortgage won't fall.
- Compound interest
- Interest earned on previous interest as well as on your original money.
- Coupon
- The fixed interest a bond pays, as a percentage of its nominal (face) value.
- Defined benefit pension
- A pension paying an income based on salary and years of service (a 'final salary' or 'career average' scheme).
- Defined contribution pension
- A pension where the pot depends on contributions and investment growth. SIPPs and most workplace pensions are this type.
- Dirty price
- A bond's price including accrued interest – what you actually pay.
- Dividend
- A payment a company makes to its shareholders out of profits.
- Dividend Allowance
- Dividend income you can receive tax-free each year – £500 in 2026/27.
- Drawdown
- Taking income directly from your invested pension pot while the rest stays invested.
- Early repayment charge (ERC)
- A fee for paying off or leaving a mortgage deal early.
- Easy access account
- A savings account that lets you withdraw money whenever you like.
- Economy 7
- An electricity meter and tariff with a cheaper rate for seven hours overnight.
- Equity
- Your share of a property's value that you own outright; also another word for shares.
- ETF
- Exchange-traded fund – a fund that trades on a stock exchange like a share.
- eVED
- Electric Vehicle Excise Duty – a proposed pay-per-mile charge on electric (3p) and plug-in hybrid (1.5p) cars from April 2028. Draft legislation, not yet law.
- Expensive car supplement
- An extra £440 a year of vehicle tax in years 2 to 6 for cars with a list price over £40,000 (over £50,000 for zero-emission cars from April 2026).
- FCA
- Financial Conduct Authority – the UK regulator for financial firms and advice.
- Fixed-rate bond
- A savings account paying a fixed rate for a set term, usually with no access until it ends.
- Fixed-rate mortgage
- A mortgage whose interest rate stays the same for a set period.
- Flexible ISA
- An ISA that lets you withdraw money and pay it back in the same tax year without using more allowance.
- FSCS
- Financial Services Compensation Scheme – protects eligible deposits up to £120,000 per person, per authorised firm (from 1 December 2025).
- Gilt
- A bond issued by the UK government.
- Gross
- Before tax or charges are taken off.
- Gross redemption yield (GRY)
- The annual return on a bond held to maturity, including coupons and any gain or loss to its £100 redemption value, before tax.
- Higher-rate taxpayer
- Someone with taxable income between £50,271 and £125,140 (2026/27, rest of UK).
- Index
- A measure of a market's performance, such as the FTSE 100.
- Index fund
- A fund that aims to track an index rather than beat it. Also called a tracker fund.
- Inflation
- The rate at which prices rise over time, usually measured by CPI in the UK.
- Interest-only mortgage
- You pay only the interest each month, so the full loan must be repaid at the end.
- ISA
- Individual Savings Account – a tax-free wrapper for savings or investments. Allowance £20,000 in 2026/27.
- Junior ISA
- A tax-free account for under-18s; £9,000 a year in 2026/27.
- Junior SIPP
- A SIPP opened for a child by a parent or guardian. Up to £2,880 a year can go in, topped up to £3,600 by tax relief.
- kWh
- Kilowatt-hour – the unit energy is billed in. A 1 kW appliance running for an hour uses 1 kWh.
- kWp
- Kilowatt peak – a solar system's maximum output in ideal conditions.
- Lifetime ISA (LISA)
- An ISA for 18–39s to open, with a 25% government bonus on up to £4,000 a year, for a first home or retirement from 60.
- Loan-to-value (LTV)
- The size of a mortgage as a percentage of the property's value.
- Lump Sum Allowance
- The cap on tax-free cash you can take from pensions – £268,275 for most people.
- Maturity
- The date a bond or fixed account ends and your money is repaid.
- Money Purchase Annual Allowance
- A reduced pension annual allowance (£10,000) after you've flexibly accessed a defined contribution pension.
- Net
- After tax or charges have been taken off.
- Nominal value
- A bond's face value – usually £100 for gilts – which is repaid at maturity.
- Normal minimum pension age
- The earliest age most people can take pension benefits: 55, rising to 57 on 6 April 2028.
- Notice account
- A savings account where you must give notice before withdrawing.
- OCF
- Ongoing charges figure – a fund's yearly running costs as a percentage.
- Overpayment
- Paying more than your required mortgage payment to clear the loan sooner.
- Personal Allowance
- Income you can receive tax-free each year – £12,570 in 2026/27, reduced above £100,000 of income.
- Personal Savings Allowance (PSA)
- Savings interest you can earn tax-free: £1,000 basic rate, £500 higher rate, £0 additional rate (2026/27).
- Platform
- A website or app for buying and holding investments, such as funds and shares, in ISAs, SIPPs and general accounts.
- Pound-cost averaging
- Investing a fixed amount regularly, so you buy more units when prices are low and fewer when they're high.
- Price cap
- Ofgem's limit on the unit rates and standing charges suppliers can charge on standard variable (default) tariffs.
- Qualifying year
- A tax year in which you paid or were credited with enough National Insurance to count towards your State Pension.
- Regular saver
- An account where you pay in a set amount each month, usually for a year.
- Relief at source
- How personal pension tax relief is usually given: you pay 80% and the provider claims 20% basic-rate relief.
- Remortgage
- Switching your mortgage to a new deal, with your current lender or a new one.
- Round-trip efficiency
- The share of energy put into a battery that you get back out. 90% means 10 kWh in gives 9 kWh out.
- Salary sacrifice
- Giving up some salary in exchange for a non-cash benefit, such as pension contributions or an electric car.
- SIPP
- Self-Invested Personal Pension – a personal pension where you choose the investments.
- Smart Export Guarantee (SEG)
- A scheme requiring larger electricity suppliers to pay small generators, such as homes with solar panels, for electricity exported to the grid.
- Standard variable rate (SVR)
- A lender's default mortgage rate, often applied when a deal ends.
- Standing charge
- A fixed daily charge for being connected to the energy supply, whatever you use.
- Starting rate for savings
- Up to £5,000 of savings interest taxed at 0%, reduced by other income above your Personal Allowance.
- State Pension
- A regular payment from the government once you reach State Pension age, based on your National Insurance record. The full new State Pension is £241.30 a week in 2026/27.
- Stocks and shares ISA
- An ISA holding investments such as funds and shares. Your capital is at risk.
- Tax year
- In the UK, runs from 6 April to 5 April the following year.
- Time-of-use tariff
- An energy tariff whose unit rate changes by time of day, often with cheap overnight hours.
- Tracker mortgage
- A mortgage whose rate follows Bank Rate plus a set margin.
- Unit rate
- The price you pay for each kWh of electricity or gas.
- Vehicle-to-grid (V2G)
- Technology that lets an electric car send power from its battery back to the home or the grid.
- Yield
- The income from an investment as a percentage of its price.
- ZEV mandate
- Rules requiring carmakers to make a rising share of new car and van sales zero-emission: 80% of new cars by 2030 and 100% by 2035.
Figures in definitions are for 2026/27 and are sourced on the relevant guide pages (checked 12 October 2026).