Easement. Rights of a landowner exercised over neighbouring land e.g. a right of way. Econometrics. Mathematical methods used in analysing economic models or problems.

Economic. Whether something can be produced profitably.

Economics. The study of an economy (business, or country or trade grouping) and its related financial structures and procedures. Effectiveness. A measure of achievement in respect of a specific objective.

Efficiency. A measure of output compared to input.

Eiusdem Generis Rule. One of the principle rules of interpretation of statutes, meaning 'of the same kind'. It is taken to mean that where general words follow specific words, those general words are interpreted in the light of the specific words - For example, in the phrase 'cats, dogs and other animals', 'other animals' will be interpreted by the court as referring to other domestic animals.

Election. An unequivocal choice.

Electro-Cardiogram. A device to measure the activity of the heart.

Eligibility. Most occupational pension schemes have age and service qualifications that must be met before an individual is able to join the scheme. Such qualifications may be termed eligibility conditions.

Embargo. Instruction which stops or delays something happening - usually relates to a trading situation, but may also relate to release of information e.g. company announcement.

Embezzlement. A form of theft; the misappropriation of an employers funds by an employee.

Emoluments. Used as a term for the total earnings package when calculating the potential benefits from an occupational pension scheme, and calculating maximum approvable benefit limits.

Employee. Someone who works under the control and direction of another in return for wages/salary.

Employee Profit Sharing Scheme. A type of share incentive scheme whereby a special trust is established to purchase company shares which, provided certain conditions are met, will escape income tax on profits on resale.

Employee Share Incentive Schemes. Arrangements which enable employees to purchase the shares of their employing company, some with tax advantages, some without.

Employee Share Ownership Plans. Share incentive schemes which allow the employing company to make tax deductible contributions into an Employee Share Ownership Trust. Trustees then use the money to buy company shares for all participating employees, who qualify by reference to working hours and length of time employed by the company.

Employer. Someone who controls and directs the work of another, an employee, in a master/servant sense, and who pays that person a wage or salary for work done.

Endorse. Signature on a document e.g. cheque, to show that ownership has passed, or e.g. a bill, to show that goods have been received. Add additional information to an insurance policy to amend the existing wording.

Endowment Assurance. A medium to long term life assurance/savings contract, incorporating an investment element and a protection element. Policy proceeds normally paid on maturity or earlier death. After early years policy acquires surrender value. See 'Maximum Investment Plan'.

Endowment Mortgage. An interest only property purchase loan where the outstanding capital will be repaid at the end of the term out of the fund accumulated under an endowment policy.

Engrossment. Preparation of a legal document in its final form prior to signing. Enterprise Investment Scheme. Introduced by the November 1993 budget as a replacement for the BES scheme which ended 31/12/93. Investors can invest up to £100,000 each year and get 20% tax relief; an additional 20% is available if the venture fails.

Enterprise Zone Trusts. Property trusts investing in enterprise zones, or areas in which businesses receive special government incentives for a fixed period. Investors in these trusts can write off most of their investment against income tax liabilities.

Enterprise Zones. Designated areas throughout the country offering special tax incentives to encourage investment in commercial property.

Equal Access. The equal access provisions of legislation relating to occupational pension scheme membership make it obligatory to offer the same eligibility conditions to men and women doing the same type of job.

Equalisation of Estates. When a husband and wife divide their assets so that they save the maximum amount of tax. Equities. Common alternative term for ordinary shares.

Equity. The value of a business (assets less liabilities, but excluding ordinary share capital) or of a property less the amount of the mortgage.

Equity of Redemption. The rights of the mortgagor, i.e. the property owner, over the mortgaged property. i.e. the right to redeem the property.

Equivalent Pension Benefit. A flat rate state pension benefit paid to employees who contracted out of the graduated pension scheme that was in force before the current SERPs. (Sometimes referred to as the Boyd - Carpenter scheme).

Escalation. A term used to describe contracted increases in pensions in payment, or in regular contributions.

Escrow. A deed which has been delivered, but which will not become operative until a later date or until certain conditions have been met.

Estate. More properly used in connection with ownership of land. Generally used in a wider context, however, relating to one's personal possessions.

Estate Duty. A tax payable on an estate at death between 1894 and 1975.

Estate Planning. General phrase relating to personal financial planning, the emphasis being on passing on intact as much of one's estate on death with as little tax as possible being paid.

Estate Protection. Generally a mix of asset reorganisation and use of packaged life products to reduce tax liability and to pay any tax that does become due.

Ethical Investment. Making investments only in companies which are considered acceptable according to a set of criteria concerning the type of product, environmental issues and political issues.

Eurobond. A medium/long-term bearer bond denominated in a European currency and issued by Government or international companies.

European Currency Unit. Based on a basket of weighted currencies of EU members.

European Monetary System. Means of stabilising exchange rates among members of European Union. See Snake and ERM..

European Monetary Union. Expressed aim of EU.

Ex gratia. A payment made without obligation Ex Officio. Latin, 'by virtue of holding an office' i.e. being in one job will involve taking on other jobs.

Excess Clause. A clause in an insurance policy requiring the policyholder, in the event of a claim, to bear part of the claim.

Exchange Rate. The value of a country's money compared with other currencies.

Exchange Rate Mechanism. (ERM) An underlying element of the European Monetary System which enables EU countries to keep currencies within a fixed percentage of each other, prior to the introduction of the Single Currency Excise. A tax on certain goods produced within national boundaries, as opposed to 'duty', which is generally a tax on imported goods.

Execution only. Where an adviser is instructed by a client to arrange a particular investment, without having received advice from the adviser.

Executive Pension Plan. An occupational pension arrangement governed by occupational pension rules, not Personal Pension rules. Open to employees only. Used by employers with few employees, and to provide discretionary benefits.

Executor. Someone (individual or professional firm) that ensures that the terms of a will are carried out.

Exemplary Damages. Damages awarded to punish the defendant, rather than compensate the plaintiff.

Exempt Approval. The usual route to achieve Revenue approval for a group occupational pension scheme. The main difference between this type of approval and Discretionary approval is the establishment of a trust.

Exempt Approved Scheme. An occupational pension scheme, established by irrevocable trust or statute, which has been approved by the Pension Schemes Office of the Inland Revenue under the Income and Corporation Taxes Act 1988, s592.

Exempt Income. Investment income which escapes tax, such as National Savings Certificate.

Exempt Unauthorised Unit Trusts. Whilst most unit trusts are authorised, authorisation places limitations on the types of investments permitted. Some funds do not seek authorisation, to escape these restrictions. Expatriate. Someone who works away from their own country.

Experienced Investor. One of the categories of investor under the Financial Services regulations; one who regularly invests in their own right and should, therefore, have a clear understanding of the risks and rewards involved.

Expression of Wish. Term generally used in relation to the payment of benefit from a group life assurance scheme, whereby to maintain the tax-free status of payments from the scheme, the Trustees have complete discretion on how to pay out the benefit. Scheme members cannot direct the Trustees, therefore, so must limit their 'instructions' to an informal, non-binding expression of wish. Also known as a Nomination form.

Extra Statutory Concessions. Concessions granted by Inland Revenue to permit actions not normally allowed or to reduce or eliminate tax which would otherwise be payable e.g. Extra Statutory Concession A9 allows GPs to be in NHS Scheme and contribute to personal pension at same time.

Free Cover. Usually relates to group employee benefit schemes (life assurance, PHI) where an element of protection is offered without the need for medical evidence.

Free Standing Additional Voluntary Contribution (FSAVC). A stand alone AVC operated outside the main pension scheme, and available to all active occupational pension scheme members, except controlling directors.

Freehold. Complete ownership of land, held in 'fee simple absolute in possession' i.e. not likely to end on death or after a time (fee simple); unconditional (absolute); the owners rights are immediate (in possession).

Freight Forwarder. Person or business who arranges documentation and travel facilities for companies despatching goods to customers.

Friendly Society. A mutual benefit organisation having the main aim of providing maintenance and relief to members during sickness and retirement. Their tax advantages enable them to offer tax effective policies, but for limited premium levels only.

Fringe Benefits. Extra benefits, available to some or all employees, on top of salary e.g. staff restaurant, pension scheme. Also termed 'Perks', which is a shortened form of perquisite. Front End Loading. One of the reasons for heavy penalties if a life or investment policy is cancelled in its early years, is that often the expense of selling and setting up the policy is recouped by the insurance company in the first year or two of the policy. This method of expense allocation is called front end loading.

Fund. Money set aside and earmarked for a specific purpose e.g. Pension fund - money set aside to accumulate for retirement. Sinking fund - money set aside for the repayment of a loan.

Fund Links. With unit linked investment policies it is often possible to spread the premium or investment between a number of funds linked to the policy.

Funded Unapproved Retirement Benefit Scheme. The 1989 Finance Act allowed unapproved pension schemes to be set up to provide benefits in excess of the 'normal' benefits for approved schemes. Both types may now run in tandem. Funding Rate. See 'Contribution Rate'.

Fungible. A security which can be exchanged for another of a similar, or the same, type. A fungible asset is one which is so similar to another as to be indistinguishable.

Futures. An agreement to buy or sell commodities, shares or currency at a future date for a price fixed today. Futures traders do not intend to take delivery of the subject of the contract, but try to buy or sell contracts in anticipation of their value increasing or decreasing.

Futures and Options Fund. An authorised unit trust which can invest a limited amount of its fund in derivatives. A Geared FOF may invest a larger proportion into derivatives.

Future Value. The value at which a sum of money invested now will grow when invested at a given rate or rates of interest during the period. See Current Value and Present Value.

Gilts. 'Gilt edged securities' are fixed rate bonds issued and guaranteed by the UK government. The bonds pay fixed interest. Traded on the Stock Exchange, and can also be purchased at Post Offices through the National Stock Register. Originally, the bond certificates had a gold border, hence the name Gilt Strip. Where each interest payment and the redemption value become investments in their own right which can be bought and sold.

Girobank. Banking system run through the Post Office which permits account holders to transfer funds from one account to another, not necessarily in the same system, without charge and without use of cheques. Give as you earn. A system of donating to charity direct from one's salary, which attracts tax relief at the highest tax rate payable.

GmbH. Gessellschafft mit beschrankter Haftung. Literally, company with limited liability; a German private company.

Golden. Used in a number of ways e.g. Golden Hello - cash inducement to encourage someone to join a new company.

Golden Handcuffs - a contract which makes it financially attractive to stay, but potentially financially unattractive to leave.

Golden Handshake - a large cash sum, some of which will be tax free, paid to employees who leave, usually not of their own accord, before the end of a service contract.

Golden Rule - a rule of statutory interpretation allowing the court to depart from strict procedures of interpretation of words if it would lead otherwise to an absurd result.

Goodwill. The value of a business over and above its book value of assets, which may literally represent the goodwill of customers or the skill and expertise of company employees. An intangible asset which may appear under fixed assets.

Gower Report 1982. A government sponsored report into investor protection. The results ultimately lead to the enactment of the Financial Services Act 1986 which established a policy of self regulation overseen by a Government agency i.e. SIB.

Graduated State Pension Scheme. The forerunner of SERPS, which operated from 1961 to 1975. A money purchase arrangement, where units of weekly pensions were purchased by units of contribution of £7.50 (males) and £9.00 (females). The pension units were revalued up to State Pension Age. Discontinued in 1975, due to the minimal retirement benefits being accrued. The unit of contributions are to be equalised to £7.50, under the Pensions Act 1995.

Graph. A drawing representing the relationship between two sets of data, one set represented on a perpendicular scale or axis, the other on a horizontal scale or axis. The relationship is plotted where the two scales intersect, the line between meeting points generally being called the graph.

Grant of Probate. A certificate issued by an English court validating a will and authorising the executors to administer the estate.

Gratuity. Usually taken to mean a cash gift or tip for services rendered. Also a cash sum paid to British service personnel on leaving the service.

Green Book. London Stock Exchange publication detailing USM trading regulations.

Green Card. Car insurance certificate used by British motorists driving abroad. US work permit needed by foreigners working in the US.

Green Currency. EC 'nominal' currency for dealing in agricultural payments, each member currency having an agreed exchange rate.

Green Paper. Preliminary report on proposals for a new law to be discussed in Parliament. Precursor to a White Paper. Greenback. Slang for US dollar bill.

Greenmail. Almost blackmail, in that the exercise involves buying enough shares in a company to threaten a takeover bid and all the expenses that exercise involves, but then selling the shares back to the company at a higher price than was made.

Gross. The sum total, without deduction.

Gross Domestic Product. The total value of finished goods and services produced within an economy over a specific period, normally one year.

Gross National Product. GDP plus net property income and profits from abroad.

Gross Profit. The difference between cost of sales and revenue before deducting general running/overhead expenses.

Grossing Up. Converting a net amount into its corresponding gross amount e.g. calculating a rate of return; anticipating a tax deduction on a gift or will bequest.

Group Life. A life assurance scheme operated by an employer for his employees. May be stand-alone or running alongside an occupational pension scheme. Will pay out, tax free, a maximum of 4 times qualifying salary, (final remuneration), plus spouses/'dependants' pensions.

Group Pension. Generally operated by an employer for a group of employees and may be a 'conventional' scheme where the employer helps fund the arrangement; or may be a group personal pension scheme where the grouping is merely for administrative convenience. Alternative name for occupational pension scheme.

Group PHI. Group PHI is usually set up by the employer. Unlike personal PHI, there may be an element of free cover, and any claim is generally paid to the company, which continues to pay the employee via the PAYE system. Guaranteed Annuity Option. Some pension policies may have a 'safety net' guarantee as a safeguard against heavy market fluctuations.

Guaranteed Death Benefit. A minimum amount of life assurance paid out under a unit-linked policy if the fund value is not higher.

Guaranteed Income Bond. Single premium insurance bond that guarantees the repayment of a capital sum at a future ate.

Guaranteed Minimum Pension. When a group occupational pension scheme contracts out of SERPS, the scheme must provide a minimum pension in respect of the amount of state pension foregone. This is the GMP, and is approximately equal to SERPS, for the same period. A member of such a scheme is guaranteed to receive a pension at State Pension Age not less than the SERPS equivalent. The GMP principle ceased for benefits accrued after 6th April 1997, when the Reference Share principle was established.

Incentive. See 'Contracting Out Incentive'. Income. Money received from employment (earned income) or investments (unearned).

Income Support. State supplementary income payable to qualifying persons if their income from other sources falls below a state determined level.

Income Tax. Direct tax levied on income, whether earned or unearned. Incorporation. The act of turning a business into a limited liability company.

Increment. Regular, automatic increase. Indemnify. To provide an indemnity. Indemnity. Guarantee payment or compensation following a financial loss.

Independent Financial Adviser. Someone authorised by the PIA and qualified by experience and examination to provide financial advice, who is not working for any single product provider company.

Independent Taxation. Separate taxation of husband and wife introduced in April 1990. Index. List of items in performance or alphabetical order.

Indexation. Price adjustment which allows capital or income to take account of, or benefit from, inflation. Indexed. Also Index-linked. Growth in income or capital which follows one of the many growth or performance indices e.g. Retail Prices Index, Average Earnings Index.

Indirect Costs. Costs which cannot be related directly to the production of specific goods or services, such as rent, overheads and selling costs.

Indirect Tax. A tax that is not paid directly to the government, like income tax, but through another medium involving choice, such as buying goods which have VAT charged on them. See Direct Tax.

Individual Pension Accounts. (IPA) A form of investment medium introduced in April 2001. They enjoy the same tax advantages as other eligible investment available to exempt approved pension schemes. Can be transferred between pension arrangements.

Individual Savings Account (ISA). A tax free investment contract, allowing investment into cash, life assurance and stocks and shares. It replaced PEPs and TESSAs for new contributions from April 1999. Different investment limits apply to maxi and mini ISAs, can be funded by lump sum or regular saving.

Industrial Assurance. Low value life assurance and savings policies issued by certain life companies and friendly societies. Premiums used to be collected by hand, door to door, but may now be paid by monthly bank mandate. See 'Home Service'.

Industrywide scheme. Scheme set up by employers in the same industry, having the advantage of offering continuous accrual of benefit if moving from one employer to another within the industry i.e. obviates potential reduced benefit through transfers.

Inflation. In simple terms, when production costs increase for the same level of output, the result is often an increase in the product price. This in turn results in a reduction in purchasing power, because more is needed to buy the same goods. This leads to higher wage demands, which leads to higher production costs, and so on. The results of this cycle is price inflation, which is what is generally meant by the term inflation.

Inflation Accounting. A system of accounting, such as current cost accounting, that seeks to compensate for the deficiencies in conventional historic cost accounting in taking in to account the variable cost of money during an inflationary period.

Inherit. To receive something from the estate of someone who has died. Inheritance Tax. Tax payable on certain gifts and transfers during lifetime. Also payable on estate at death if its value exceeds the inheritance tax threshold figure.

Initial Units. With some unit linked products, management expenses are recouped by having two types of unit. Initial or capital units are purchased by new contributions for one or two years, then accumulation units are purchased thereafter. The initial units have a higher charge to help offset expenses.

Initial rate Interest rate that is payable from the commencement of the loan. Many mortgage products, e.g. fixed and discount, have an initial rate of interest which will change at the end of the initial period.

Injunction. Court order forbidding a particular action or inaction. Insider Trading. The buying/selling of shares on a recognised stock exchange by someone employed (currently or within the last six months) by the company concerned, and who is in possession of restricted information not generally available on the market. The Criminal Justice Act 1993 contains legislation attempting to deal with the problem.

interest gross interest is the payment of interest (subject to any required certification) without deduction of tax. Net interest is the payment of interest from which the basic tax rate has been deducted.

Insolvency. The inability of a business to meet its liabilities. Inspector. In insurance terms, an 'inspector of agents' i.e. someone representing an insurance company who calls upon intermediaries who hold an agency with the company. The role is generally seen as a new business generating one.

Institutional Investor. It is estimated that over 90% of UK shares are owned by such investors, which are generally pension funds, unit trusts and insurance companies.

Instrument. A legal document, generally relating to a financial transaction. Insurable Interest. A basic requirement of insurance in order for the contract to be valid; there must be present the possibility for monetary loss in the event, say, of the death of the life assured.

Insurance. In return for agreed payments, the recipient agrees to recompense the payer in the event of certain events e.g. loss, damage, injury, death. Encapsulated in the phrase 'You pay the small cheques, we pay the big ones'.

Insurance Broker. Somebody who derives an income from arranging insurance policies.

Insurance Brokers Registration Council. A body established under the Insurance Brokers Registration Act 1977 to register and regulate all those who wish to be known as 'Insurance Broker'. No longer in existence. IBRC members are now controlled directly by the Financial Services Authority.

Insurance Ombudsman Bureau. A body established by insurance companies in 1981 to investigate consumer complaints.

Insure. To protect something of value by means of risk transfer i.e. payment of small regular sums to a specialist company (insurance company) so that in the event of loss or damage, the company will pay monetary compensation. Insurers. General term for insurance companies.

Intangible. Property or belongings which cannot be touched or seen, but which have value e.g. goodwill in a business.

Intangible Asset. Non-physical asset, such as goodwill, trademark or patent. Inter Spouse Transfers. A tax-free transfer under Inheritance Tax rules. Inter Vivos. Used in the phrase 'gift inter vivos', or gifts between living individuals and used in conjunction with the seven year gifting period for potential Exempt Transfers (PETs) under Inheritance Tax rules.

Interest. Money received as income from investments. Money paid for the use of borrowed money. Part ownership of something e.g. an interest in possession, or controlling interest.

Interest in Possession. An entitlement to the income from trust property. Interim. Occurring during a company's financial year rather than at its end. Interim results are often accompanied by interim dividends, whereas the year end accounts may give rise to final dividends. Interim Deed. A temporary measure whilst waiting for the full and final version to be engrossed. Often used when establishing group pension arrangements.

Intermediaries. Generic term referring to anyone who assists two other parties to do business e.g. IFA effectively bringing together client and insurance company. Intestacy. The result of having died intestate i.e. without a valid will. Intestate. Without a valid will.

Intrinsic. Inherent and essential to the object concerned e.g. intrinsic value may have no relationship to the real value, the intrinsic value being, say, sentimental.

Introducers Agreement. An agreement used where a non-registered individual introduces a potential client to an authorised financial adviser. Necessary where the introduction is to a tied agent, as the inference of the introduction is that not only is the adviser being recommended, but also the adviser's limited range of products. In general use with IFAs also. In both cases, such agreements formalise the relationship to ensure the introducer does no more than introduce.

Inventory. A list of stock or contents. Invest. To put money into trading ventures, existing contracts or organisations (e.g. shares or building societies) with a view to producing income and/or increases in capital value. Investment. The use and management of money with the aim of increasing its value by means of generating income and/or capital growth.

Investment Bond. A single premium unit linked life policy containing a nominal amount of life cover. A non-income producing investment. Any partial or full encashment proceeds are subject to special tax rules. Investment Business. Under the Financial Services Act 1986 this phrase has a specific meaning, covering all life assurance, pensions, investments, but not covering most PHI, term assurance and medical insurance contracts. The common link is the investment element.

Investment Managers Regulatory Organisation. (IMRO) Self Regulatory Organisation which regulates investment managers, including those who advise institutional or corporate clients. Membership includes unit trust, OEIC, investment trust and pension fund managers, banks and investment management subsidiaries of life assurance companies.

Investment Trust. A public limited company which invests in shares of other companies. Its shares are traded on Stockmarket. They are not true trusts and can borrow money to buy additional investments.

Investor. Person or organisation who invests money or time.

Investor Protection. The sole purpose of the Financial Services Act 1986. Investors Compensation Scheme. A scheme established by the S.I.B. in August 1988 to help recompense for losses within certain limits by failure on the part of the authorised business. Investors Compensation Scheme Levy. General term for payment into the Investors Compensation Scheme. Invisible. Invisible Assets - assets which have value but cannot be seen, such as patents.

Invisible Earnings - foreign currency earned by providing services, rather than goods, abroad e.g. insurance. Invitation to Treat. A pre- offer and acceptance stage which may lead to formulation of a contract e.g. goods displayed in a window are deemed an invitation to treat, not an offer for sale.

Invoice. A formal request for payment for goods and/or services previously supplied.

Irredeemable. Certain government bonds are irredeemable (e.g. war loans) which means that whilst they pay interest they have no maturity date, and so will be repaid only at the discretion of the government. Irrevocable. Cannot be rescinded or changed. An irrevocable trust is a necessity for exempt approval of a group pension scheme.

ISA Mortgage. An interest only mortgage where the outstanding loan at redemption will be repaid using the proceeds of a series of ISA investments. The ISAs do not guarantee repayment of the loan at the redemption date.

Issued Capital. The amount of the authorised capital of a limited company that has actually been allocated i.e. not necessarily 100%. See 'Authorised Capital'

Key Employee. An individual who makes a significant profit contribution to the business activity and profitability of a company, and whose loss would have an effect on the continued profitability of the business.

Key Employee Insurance. Life assurance or PHI contracts, taken out by the company to help compensate the business for the loss through death or disability of the element of profit contributed by a key employee.

Key Features Document. A document that will contain key information, such as: details of what the policy might be worth in future years. details and explanation of the charges made on the policy. an explanation of the purpose, type, and risk level of the policy

Know Your Client. Legal obligation on financial salespeople (such as PIA members and stockbrokers) to record all aspects of a client's personal financial situation and to ensure that all advice takes this into account. See Best Advice.

Launder. To 'clean up' 'dirty money' earned through illegal means by easing it into the normal monetary systems so that all traces of its origins are removed, or 'washed out'. The Criminal Justice Act 1993 contains legislation dealing with money laundering and insider dealing.

Lease. A lease is a contract by which a property owner grants exclusive use of property or assets for an agreed period.

Leasehold Property. Property held under lease. Ledger. Book in which accounts are kept.

Legacy. Property inherited on the death of someone.

Legal Tender. The form of currency in which someone has the legal right to pay a debt , and which a creditor must accept. In the UK, banknotes have unlimited legal tender, but, for example, 50p coins have legal tender only up to £10. Legatee. Someone who receives a legacy.

Lending Multiple. Money borrowed to help with a house purchase is usually calculated with reference to a ceiling multiple of income(s).

Lending Panel. Generally used in relation to a group of lending organisations e.g. building societies, used by a life company to provide advances for house purchase.

Lessee. Someone who uses an asset owned by someone else, its use being governed by an agreement called a lease. The Lessor is the owner of the asset. Let. To make available living or office accommodation in return for rent.

Letter of Credit. Document from a bank authorising payment on behalf of a client to a third party. Letters of Administration. Authority granted by the court to an individual permitting that person to administer the estate of someone who died intestate.

Letters of Exchange. A method of creating a trust for a one-person pension arrangement such as an EPP. The method works simply by the employer writing to the employee setting out the scheme details; the employee replies accepting.

Level Premiums. The incidence of mortality shows that the risk of death generally increases with age. To match this risk increase, premiums should, in theory, increase at the same rate. As this would at some point make the cost prohibitive and unattractive, it has become the norm to calculate a premium that will remain level throughout the term of the contract. This effectively means 'overpaying' at the start of the contract, which will counterbalance the 'underpayment' later.

Level Term Assurance. A form of life assurance. The sum assured remains contact throughout the term of the policy and is paid on death during the term. Policy does not have a surrender value.

Leverage. See 'Gearing' Leveraged Lease. Where the lessor obtains the funds to purchase the leased asset from a third party on a non-recourse basis.

Levy. A tax, duty or fine imposed by a government or other organisation, often on a per capita basis. Liabilities. Items which are owed e.g. loans, debts in general.

Licence. Officially authorised paperwork, effectively a permit to do something e.g. import or export licence.

Licensed Deposit Taker. Business which is licensed to take money on deposit and pay interest on it e.g. building society or friendly society.

Lien. A charge or claim over an asset, often for security as a loan. Lieu. As in "In lieu of.....", meaning 'instead of.......'

Life Assurance. A general term covering a variety of types of personal protection policy. The one thing they all have in common is that a payout on death is the main purpose for the contract. PHI, for example, would not be covered by this term, nor would pensions, nor some lump sum investments.

Life Assurance Premium Relief. Tax relief, still available, on policies in force and taken out pre-14th March 1984. The relief was abolished at that date for all new policies. The actual rate has fluctuated, generally being half the basic rate tax.

Life Assurance and Unit Trust Regulatory Organisation. In addition to being authorised to do long term insurance business by the DTI, insurance companies had to register with LAUTRO, prior to PIA, in respect of the marketing of its products.

Life Assured. The person on whose life the life assurance policy is based.

Life Business. General term which can be applied specifically to life assurance, but often is applied to all life, pensions, savings and investment business.

Life Insurance. See Life Assurance. Although life insurance is probably the more correct term, life assurance has become generally accepted as the generic term for the market.

Life Interest Trust. A trust which controls property which may be held only as life tenant.

Life of Another. Means of writing a policy on the life of another person. Policyholder receives policy proceeds on the death of the life assured.

Insurable interest must exist when policy established. Often used as security against death of spouse or business partners.

Life Offices. Generally taken to refer to those companies which sell life assurance, pensions and related packaged products.

Life Tenant. Person with an interest in property for their life only e.g. income from investments. At death the interest ceases and cannot be passed on by the life tenant's will.

Limited Liability. A form of business which limits liability to the assets of the company, and does not extend to the personal assets of the shareholders or offices of the company.

Limited Revaluation Premium. A premium payable to the State when a member of a contracted out salary related occupational pension scheme ceases to be contracted out and the method of revaluation is limited (one of 3 available options). The pension scheme contracts to revalue the GMP in line with the Average Earnings Index up to 5% pa. The state provides revaluation above 5%, on receipt of the LRP. This method of revaluation ceased on 6th April 1997.

Liquid Assets. Assets that are easily converted to cash. Liquidation. Distribution of a company's assets to creditors prior to closing down.

Liquidator. Person appointed to wind up a company and to distribute company assets, or their value, to creditors and shareholders.

Liquidity. Cash and readily convertible (to cash) assets. The liquidity of a business is its ability to meet outstanding debts.

Liquidity Ratios. It should be realised that ratio's are static, rather like the balance sheet, and should only be used to discern trends. Current (working capital) ratio is a guide to financial safety in that it shows how many times current assets will cover current liabilities. It is expressed as Current assets divided by current liabilities The 'acid test' ratio reveals the capability of a business to repay current obligations immediately, and is calculated as: Cash and marketable securities and debtors divided by current liabilities In some cash based businesses, the cash ratio may be a better guide. This is practically the same as above, but excludes debtors.

Listed Company. A company that satisfies the listings rules of the Stock Exchange, and whose shares are quoted and traded on the Exchange.

Listed Security. A share which is quoted on a stock exchange. Specifically in the UK, this would be a listing in the main market (as opposed to the unlisted securities market or the third market).

Lloyds. The Corporation of Lloyds, or Lloyds of London, is effectively a large insurance market made up of small syndicates whose members underwrite insurance risks i.e. promise to pay out in the event of loss.

loan to value ratio (LTV) is the ratio of the loan amount to the property valuation expressed as a percentage. E.g. if a borrower is seeking a loan of £20,000 on a property worth £40,000 it has a 50% loan to value rate. If the loan were £30,000, the LTV would be 75%. The higher the loan to value the greater the lender's perceived risk. Lenders will be more cautious in underwriting high loan to value loans. Loans above normal lending LTV ratios may require additional security

Loan Stock. A security paying a fixed rate of interest which returns capital at the end of a stipulated period of time. Secured by the company's assets.

Locum. Generally accepted short form of locum teneus, or short term substitute for an IFA in the event of absence from work for any reason e.g. holiday, sickness. The locum must be able to provide the same level of advice as the principal.

London Commodity Exchange. A marketplace for agricultural product derivatives.

London International Financial Futures and Options Exchange. A marketplace for financial instrument derivatives.

London Metal Exchange. A marketplace for base metal product derivatives.

Long Term Care. A generic term given to an 'add on' contract option to, say, a whole of life contract. Basically, cash is taken from the policy and used to purchase an income to cover additional expenses incurred by old age.

Longs. Government stock maturing in 15 years or more.

Loophole. An admissible interpretation of law or regulation which leads to a legal way of avoiding the law.

Low Cost Endowment. A variation of the with profit endowment, but is combined with a decreasing term assurance so that the investment build up need not be quite so steep, thus reducing the cost.

Low Start Endowment. Endowment policy designed for use with mortgages where premiums increase at a fixed rate over a period of years.

Lower Earnings Limit. The minimum amount which must be earned in any pay period before NIC becomes payable. Also the lower limit for SERPS accrual. Income qualifying for SERPs benefit forms a band of earnings between the Lower Earnings Limit (LEL) and an Upper Earnings Limit (UEL), this latter being usually between 6½ and 7½ the LEL. See also 'Middle Band Earnings'.

Lower Rate Tax. The rate of tax paid on the first band of income which exceeds the personal allowance.

Marginal Costing. The assignment of variable costs only to production costs, excluding fixed/overhead costs.

Marginal Tax Rate. The highest tax rate an individual pays, usually taken to mean less basic rate tax (23% in 1998/99).

Market. Place or area where items may be bought and sold. Groups of potential purchasers who might buy an item.

Market Level Indicator. An index comparing the values of fixed interest securities and shares, used in determining state scheme premiums.

Market Capitalisation. The value of a company on the market, computed by multiplying the number of shares by the current market price.

Market Counterparty. A category of investor identified under financial services legislation. Person who, in course of own profession, transacts the same type of business as he transacts on his own behalf via an adviser. Deemed to have full understanding of nature and risks of the investment transaction e.g. stockbroker purchasing shares.

Market Maker. A dealer in securities on the stock exchange who deals as principal rather than agent. This used to be the role of the stock jobber.

Market Value. The value of an asset to a third party on the open market.

Matched Bargain. Where the purchase and sale of the same stock are matched, quantity for quantity, at a price agreed by buyer and seller, rather than on the open market.

Material Fact. Information relevant to the discussion or situation e.g. information to be provided on a life assurance proposal form.

Maturity. In financial planning terms, the date at which a financial document or insurance policy becomes payable.

Maximum Contributions. Pension contracts, both PPP and occupational, have maximum contribution levels. The PPP maxima are set out in a fixed table, the occupational effective maxima are generally governed by the projected benefits to prevent overprovision.

Maxi ISA. Can contain all three investment types: cash, life assurance or stocks and shares. Must contain an equity element. Maximum contribution limits apply to each element and total investment. A maxi ISA and mini ISA cannot be established in the same tax year.

Maximum Benefit Regimes. Term used to describe three categories of pension scheme membership used by the Inland Revenue when calculating maximum benefits. Regimes introduced in 1987 and 1989 give rise to three categories: pre '87, '87 - '89 and post '89 membership.

Maximum Investment Plan. Effectively, a unit linked version of the endowment policy i.e. a regular savings plan with life assurance cover, paying out on maturity or earlier death or surrender. The major difference is that MIPs do not attract bonuses, their value depending on the unit price. McDonald Report. A report produced on training and competence standards in the financial services industry, and making recommendations on competence, training, knowledge, skills and entry level qualifications.

Mean. Short for "arithmetic mean" meaning the average of a group of figures. Median. A point in the middle of a set of number; a sort of 'mean'.

Medical Attendant's Report. Evidence, provided by the proposer's doctor, of a proposer's medical history which may be required during the underwriting stage of the proposal process.

Medical Evidence. Because of the risk implicit in any proposal of life assurance, an insurance company will reserve the right to call for evidence of the proposer's state of health during the proposal process.

Medical Examiner's Report. In addition to the medical history received from the proposer's own doctor in the MAR, it is sometimes necessary to seek additional information regarding current state of health. This is done via medical examination, the result being sent to the underwriting department in the form of a MER.

Medium. A gilt which is due to be redeemed after five to 15 years.

Memorandum of Association. In conjunction with the Articles, the Memorandum forms the official documentation of the limited company. Where the general purpose of the Articles is to govern the internal operation of the company, the Memorandum governs the companies external operations and business relationships.

Mercantile. Relating to business, commercial activity. Mercantile Agent. See 'Factor'. Merchant Banks. A bank which deals in corporate finance rather than domestic bank accounting.

Merchantable Quality. To be fit (in respect of goods purchased) for the purpose for which they are bought.

Merger. The union of two or more companies. Distinct from a takeover where one company purchases another.

Mezzanine Finance. Business finance following the start-up phase of a business. Less risky, in general, than start up finance.

Micro. Prefix meaning very small.

Middle Band Earnings. Earnings between the lower earnings limit and upper earnings limit. Used to calculate an employee's SERPS benefits and National Insurance contributions. Only employer NI contributions payable on earnings exceeding middle band earnings.

Mini ISA. Can contain only one of three investment types: cash, life assurance or stocks and shares. Up to three mini ISAs can be held in each tax year.

Maximum contribution limits apply. A maxi ISA and mini ISA cannot be established in the same tax year.

Minimum Contributions. Contribution payable to an appropriate personal pension by the DSS in respect of a member who has contracted-out. Consists of an age related rebate of NI contributions plus basic rate tax relief on employee's element of the rebate.

Minimum Funding Requirement. (MFR) A minimum funding standard that applies to final salary pension schemes. Regulations detail the assumptions to be used in the calculations. If a scheme fails to meet the MFR, action must be taken to restore the funding level within a specified timescale.

Minimum Income Guarantee. (MIG) Means tested benefit to help individuals whose income in retirement is low. Amount of guarantee varies depending upon individual circumstances Minimum Payments. Minimum amount which an employer must contribute to a contracted-out money purchase pension scheme. Consists of a flat rate rebate paid by the employer, topped up by DSS with age related rebates after the end of the tax year.

Minority Interest. A minority interest arises where a company owns shares in a subsidiary company, but not all of the shares.

Minors. Generally, someone not of voting age. Minutes. Written record of a meeting. Mitigate. To alleviate, make less onerous.

Modelling. Using numerical methods and relationships to represent real life situations as a basis for business projections.

Monetarism. Economic theory that the volume of money on issue affects prices; therefore, inflation can be controlled by controlling the money supply.

Money Market Accounts. The money market operates through the buying and selling of short-term loans and securities e.g. Treasury bills and bills of exchange. Private investors, individuals or companies, can invest in this market, usually with a minimum input of £50,000, and receive a higher rate of interest over a shorter term.

Money Purchase. See 'Defined Contribution'.

Monopoly. The control of a market by one source of supply.

Moral Hazard. The potential for the attitudes, lifestyle and conduct of individuals to affect the level of risk attaching to a proposal for life assurance.

Moratorium. A temporary halt.

Morbidity. The incidence of sickness and disability. Used as a guide in calculating PHI premiums, in a similar way to the use of mortality statistics with life insurance.

Mortality Risk. The risk of the life assured dying during the term of the policy. Mortality Table. A statistical table showing the likelihood of death at any particular age.

Mortgage. A legal charge on a property, giving security for a loan. The borrower (mortgagor) gives the mortgage to the lender (mortgagee).

Mortgage Deed. Evidence of the contract between lender and borrower, secured by legal charge.

Mortgage Indemnity Guarantee. (MIG) A single premium indemnity policy paid for by the borrower which insures the lender against losses in excess of 75% (usually) of the loan-to-value sum.

Mortgage Interest Relief At Source. (MIRAS) Abolished for the majority of new and existing loans with effect from 6th April 2000. System of tax relief on property purchase borrowing, whereby repayments to the lender are paid net of tax on the interest on the loan. The lender then reclaims the relevant sum from the Revenue.

Mortgage Protection. Generally refers to a type of reducing term assurance used in conjunction with a repayment mortgage. The idea is for the sum assured under the policy to reduce in line with the outstanding loan.

Mortgagee. Someone who lends money on suitable security.

Mortgagor. Someone who offers security to be able to borrow money.

Mutual. Relating to two or more involved parties.

Mutual Life Office. A company without shareholders, and effectively owned by the with-profits policyholders, who are entitled to a share of any surplus funds at valuation. These 'surplus' distributions are termed bonuses.

N2 Date. The date on which the Financial Services Authority will receive its full powers and become fully operational.

Naked Trust. See 'Absolute Trust' Name. Member of a Lloyds syndicate who pledges security for insurance arranged by Lloyds of London insurance underwriters.

National Insurance Contributions. An additional form of tax paid by most employers, employees, self employed (and some unemployed) people. For the employed it is deducted from income by the employer on a scale related to income levels. The employed pay part flat rate, part income related. The self employed and the unemployed may pay a flat rate voluntary contribution to keep their benefits entitlement up to date.

National Savings. A 'branch' of the treasury, selling investment, savings and deposit products over the counter at post offices with the aim of raising money for the government, and providing medium to long term financial planning products for customers.

National Savings Stock Register. Register of gilts which may be purchased through the Post Office.

Needs Analysis. The breaking down of a situation to determine whether there are areas of risk or weakness that should be protected.

Negative Equity. The situation where the value of the property falls below the outstanding loan(s) used to purchase it.

Negotiable. Open to discussion and bargaining; something in which the title can easily be transferred to another person. Nest Egg. Supply of 'emergency' or 'future use only' money usually saved over a period of time. Net. After all deductions have been made.

Net Book Value. The written down value (after allowing for depreciation) of an asset.

Net Pay System. Refers to the situation where employee contributions to an occupational pension scheme are deducted from gross income before tax is applied. This avoids the need to adjust the tax code.

Net Profit. Profit after all deductions except tax and dividends.

Net Relevant Earnings. A definition of 'pensionable income' for the self employed by which Personal Pension Plan contributions are determined. Relevant earnings less business expenses (includes stock relief deductions, losses or capital allowances). NRE for employed PPP holders is effectively gross PAYE pay.

New Code. A code of approval for new occupational pension schemes established after the Act which was introduced by the 1970 Finance Act. Approval for schemes currently is under the Income and Corporation Taxes Act 1988.

Nikkei Average. Index of prices of certain leading shares quoted on the Tokyo Stock Exchange.

Nil Rate Band. Refers to the ceiling on cumulative transfers for IHT purposes, under which transfers do not attract tax.

No Claims Bonus. Reduction in premium when no claims have been made over an agreed period.

Nominal. Small payment, or value Nominal Capital. Total face value of authorised issuable capital.

Nominal Ledger. The account book showing expenditure on nominal accounts i.e. named business accounts such as postage, printing, etc.

Nominal Value. The par, or face, value of something e.g. a share issue.

Nomination. The naming of a person to receive an award or benefit e.g. similar to an expression of wish under a group life assurance scheme.

Nominee. Someone who is nominated to deal with certain matters on behalf of another party.

Nominee Account. An account operated by, say, a trustee or stockbroker, which holds shares or other property for you in the name of a trustee or nominee, not in your name e.g. shares in a PEP are held in such an account.

Non-Medical Limits. Refers to underwriting limits, whereby sums assured up to certain levels, other things being acceptable, will not require a medical examiners report. See 'Free cover'.

Non-Profit. A policy where the value of the policy at maturity is guaranteed at outset.

Non-Qualifying Policy. One which does not satisfy all of the qualifying rules.

Non-Recourse. Where finance is raised to purchase a leased asset, the lender will have recourse to the assets held by the lessee in case of default, but not to the lessor/borrower.

Normal Expenditure. An exempt lifetime transfer under IHT rules, whereby to avoid being classified as a PET the transfer must be part of normal expenditure and not affect the standard of living of the donor.

Normal Retirement Age. The expected retirement age, usually for pension purposes, as defined in the scheme rules.

Normal Retirement Date. Refers to the expected or usual retirement date assumed when setting up a pension scheme. e.g. end of the month following 60th birthday.

Nostro Account. Bank account held by a UK bank with another bank abroad.

Notary Public. Lawyer with authority to witness written documents and verbal statements, thus making them official. Someone who attests to the validity of deeds and other documents for official use.

Notional. Assumed, unquantified, not known exactly. Novation. An agreement to replace one of the original parties to a contract with a third party.

Occupational Pension Scheme. A pension scheme established by an employer, usually on a group basis.

Occupational Pensions Advisory Service. A voluntary organisation offering free advice and help to members of the public, who are experiencing problems concerning their rights to benefits in pension schemes.

Occupational Pensions Board. Established to oversee contracting out, and to examine and report on issues of public interest related to pensions and connected subjects e.g. preservation of benefits.

Off The Page Advertisement. An advertisement which incorporates an application form to apply for an investment directly, based on the information contained within the advertisement.

Off the Shelf Company. A company which has already been registered but which has not started to trade, so is available for sale at nominal cost if someone wants a new company quickly. Offer and Acceptance. Two of the necessary stages in a viable contract.

Offer Price. The price at which a security is offered for sale. See Bid Price.

Offer to Bid. Compares the original purchase cost or offer price - usually of a unit trust - with its bid price, the price you receive if you sell.

Offer to Offer. Compares the original purchase cost or offer price - usually of a unit trust - with its current offer price.

Office of Fair Trading. Government body charged with ensuring a 'level playing field' for competition in all sectors of the economy.

Officer. Someone with an official position in an organisation.

Official Receiver. Person appointed by the DTI to act in bankruptcy matters and oversee the winding up, and possibly liquidation, of the debtor.

Offset. To balance one item with another.

Offshore. Basically, anywhere out of the country not within the authority of the Inland Revenue.

Offshore Bond. An investment bond issued by a company outside the UK and outside the authority of the Inland Revenue. Usually established in countries with little or no tax giving gross fund growth. Popular locations include Luxembourg, Republic of Ireland, Channel Islands and Isle of Man. Old Code. Pre-1970 Finance Act approval for occupational pension schemes. All pre-1970 schemes had to be re-approved under New Code by April 1980. Old Lady of Threadneedle Street. The Bank of England.

Ombudsman. An official who investigates complaints from the public against official bodies, large organisations or industry sector participants.

Oncosts. Costs of producing an item in addition to the direct costs.

Open Ended Investment Company. OEICS Collective investment in which investors receive shares, different classes can be issued e.g. UK equities. Single pricing for buying/selling shares, value of shares reflects net asset value of fund assets. Fund assets held by an independent depository.

Open Market Option. An option under pension schemes to take the cash in the pension fund and find the best annuity rate available from other companies in the market. There may be a charge for taking the money, or perhaps enhancement if staying.

Opening Years. Special tax rules and options apply to the opening three years of a business.

Operating Profit. The figure which remains after deducting all operating costs (except capital expenses) from sales revenue.

Opportunity Cost. In making a decision, the foregone potential of not following an alternative course of action. Optimum. Most suitable, best.

Opting Out. This is where a member opts out of an employer's pension scheme whilst remaining employed, or may refer to an employee who is eligible to join an employer's pension scheme, but decides not to join.

Option. An option gives a right - not an obligation - to buy or sell a given commodity, at a set price, within an agreed period. A call option gives the right to buy a security at an agreed price, called the strike price. A put option gives the right to sell before a give date. A traded option is one that can be bought and sold on the traded option market run by the Stock Exchange. A traditional option can be exercised on one day only. The premium is the price you pay to acquire the option.

Ordinary Residence. For the purposes of taxation an individual may be ordinarily resident in the UK although he or she is not physically resident in a particular tax year. The term "ordinary residence" is broadly equivalent to habitual residence. If an individual is resident in the UK year after year he or she is ordinarily resident here and liable for UK tax.

Ordinary Shares. The voting shares of a limited company.

Organic Growth. Growth based on expanding the existing trading base, rather than buying other businesses.

Overdraft. In banking terms, drawing out more money from an account than there are available funds.

Overfunding. It may be possible for the fund of an occupational scheme or a FSAVC to become so large that projected benefits exceed either scheme benefits or Revenue maxima. Remedies may include increasing benefits up to Revenue maxima, contribution holidays or refunds.

Overheads. Everyday costs of running a business.

Overtrading. Shortage of liquidity caused by not having enough working capital to support the level of sales and production. Taking on business which cannot be funded by cashflow.

Other income Income in addition to basic annual salary or, in the case of self-employed, annual net profits.

Own Life. Refers to a policy taken out on one's own life for the benefit of one's estate or other specified beneficiaries.

P11D. Tax form returned by employer detailing benefits in kind for employees earning in excess of £8500 p.a.

P45. Certificate provided by employer on leaving service, showing PAYE code, earnings in the current tax year to date and how much tax paid since the start of the tax year.

P60. Annual statement provided by employer to employee showing income and tax paid.

Package. Separate elements grouped together to form a product or deal. See 'Compensation Package'.

Packaged Products. Phrase used to describe products that invest in a spread of investments which may also include an element of life assurance e.g. endowment policies, investment bonds, unit, trusts, ISAs.

Paid Up. It is possible, with certain policies having an investment content e.g. endowment, to cease paying premiums and retain a paid-up policy which will pay out on eventual claim. Also another name for 'preserved' pensions.

Paper. Documents such as bills of exchange which represent money . share certificates. banknotes.

Par Value. The face value, or nominal value of a company share, and the minimum value at which the shares are issued.

Parent Company. Company which holds at least 50% of the ordinary shares of another company. Distinguished from 'Holding Company' because a parent company often continues to trade in its own right, whereas a holding company usually does not.

Pareto Principle. Amongst Pareto's many economic analysis laws and principles was the observation that income, whatever the political and taxation conditions, will be distributed in the same way in all countries - 20% of earners will receive 80% of the income. This has been extended generally to many situations e.g. 20% of sales calls produce 80% of the income.

Pari Passu. Latin phrase taken to mean of equal value or proportionately. Often used when new shares are issued with the same rights as existing shares.

Parity. Equal status, equal value. Often used when comparing currency values.

Parkinsons Law. Observations by C. Northcote Parkinson that: work expands to fill the time available, and expenditure rises to meet income. Taken to apply to larger organisations in his initial observations, but often applied generally. Partner. In a legal sense, someone with whom you carry on a business. Partnership Protection or Partnership Assurance See: Business Protection.

Patent. Official documents protecting the exclusive right to manufacture an item and exploit its use.

Pay and File. System of reporting profits and paying corporation tax, based on comprehensive questionnaire rather than assessment. Replaced by Self Assessment for companies for accounting periods ending on or after 1st July 1999.

Pay As You Earn. System of collection and payment of income tax operated by employers.

Pay As You Go. The State pays out benefits from revenue received from taxation and other sources, rather than funding and investing to produce income. Also termed 'assessmentism'.

Payback Period. The length of time taken for the net cash inflow from a new project to cover the initial investment of the project.

Pecuniary. Relating to money; monetary.

Penny Shares. Term used to describe shares with low value, usually under £1 per share; often high risk shares.

Pension. An annual income, usually associated with the post-retirement period of one's life, but not necessarily so.

Pension Fund. General term used to describe an investment fund built up during working life and used at retirement to purchase an annuity to provide a continuing income.

Pension Increases. Once in payment, pensions may remain at the same level, increase occasionally at the discretion of the company or have contractual annual increases, up to increases in RPI.

Pension Mortgage. When there is a "promise to repay" the mortgage, using the lump sum cash payment, payable at retirement. As a pension cannot be assigned, the pension policy cannot be used as security.

Pension Schemes Office. An office of the Inland Revenue whose task it is to approve all occupational and Personal Pension Schemes. Replaced the Superannuation Funds Office.

Pension Transfers. Refers to a transfer of the cash value of accrued pension from an approved scheme to another approved scheme. The cash is transferred direct from one pension provider to another.

Pensionable Earnings. Earnings on which benefits and contributions are calculated. These are not necessarily full or P60 earnings, the actual definition depending on whether fluctuating earnings are excluded and/or adjustments made.

Pensionable Service. Period of service with a company which is used in the calculation of pension benefits (in defined benefit schemes) and of maximum approvable benefits.

Pensioneer Trustee. An independent trustee and mandatory requirement of a small self-administered pension scheme.

Pensioner's Rights Premium. A state scheme premium paid to the state for a member (or pensioner over state pension age) of a contracted out defined benefit scheme which ceases to be contracted out. The state then accepts the liability to pay the GMP.

Pensions Ombudsman. Set up by the Social Security Act 1990 to review and settle disputes between pension scheme members and their pension scheme.

Pensions Tracing Registry. Agency which helps people trace accrued/preserved pension benefits where, for example, a company has ceased trading PEP Transfer. Transfer of existing PEP investment to a new PEP manager. Aim is to benefit from lower charges and/or potentially better investment performance.

Peppercorn Rent. Nominal rent, often in goods rather than cash. Per. Latin, meaning 'for each', as in Per annum - each year Per capita - each person Per cent - each one hundred Per Pro. Latin, Per Procurationem. Having the authority, with the authority of, on behalf of.

Percentile. A one hundredth part of a set of data.

Periodic Charge. An IHT charge imposed on the capital of certain discretionary trusts, where the capital exceeds the nil rate band.

Perks. Shortened version of 'perquisite'. See 'Fringe Benefits'.

Permanent Health Insurance. A policy which will provide an income in the event of long-term absence from employment because of illness or disability; income ceases upon return to work, retirement or death.

Permanent Interest Bearing Shares. Investment offered by building societies, giving a fixed rate of interest, paid twice yearly net of basic rate income tax but free of CGT.

Permitted Maximum. Usually refers to Revenue benefit and earnings cap limits. Personal Accident Insurance. Not life assurance, but will pay out income or a cash lump sum in the event of disability, dismemberment or death, caused by an accident.

Personal Allowance. The level of income above which income tax starts to be levied. Personal Chattels. Tangible and moveable property, personal belongings.

Personal Equity Plan. Tax free investment contract allowing limited investment into equities and unit trusts. One only per year per person, and they have to be maintained for a full year to get full tax benefits.

Personal Financial Planning. Generic term covering financial assessment and needs analysis, with a view to maintaining and improving the current financial situation, and securing the future.

Personal Investment Authority. (PIA) Regulatory organisation which replaced FIMBRA and LAUTRO and some functions of IMRO. It will be replaced by the FSA when it receives its full powers at N2 date.

Personal Pension Policy. A Pension policy available to employed persons who do not qualify for, or are not members of, an occupational scheme other than a contracted in scheme (in which case the member can take out a Rebate only PP) or a scheme providing death in service benefits only. Also available to the self employed with Net Relevant Earnings.

Personal Pension Protected Rights Premium. A state scheme premium paid when a personal pension arrangement ceases to contract out. The member is bought back into SERPS, for the amount the value of the PPPRP will purchase. No longer applies from 6th April 1997.

Personal Representative. Person who deals with the estate of a deceased person under the terms of a will or the rules of intestacy. Duties and responsibilities end when the estate has been dispersed and all taxes and debts paid.

Peter Principle. Theory advanced by Lawrence J Peter that in large organisations individuals are promoted to the level of their incompetence i.e. to jobs for which they are not suited and do not display competence.

Petrocurrency. Foreign currency earned by exporting oil.

Pie Chart. Diagram where statistical information is displayed as proportionately sized 'slices' of what appears to be a circular 'cake' or 'pie' shape. Comparison should be by area, not width.

Plaintiff. Someone who starts a legal action against another person. See 'Defendant'.

Pledge. An item retained by a pawnbroker in exchange for cash, and held until the cash is repaid. Essentially, a form of security.

Plenary. Complete. A 'plenary session' is a meeting attended by all.

Poison Pill. Action taken by a company threatened by an unwanted takeover bid to make it appear less attractive e.g. sale of an attractive or prized asset.

Polarisation. Concept introduced by the financial services regulations whereby it is mandatory for financial advisers to be either independent or tied to one company; they cannot be both simultaneously.

Policy. Formal document produced by the insurance company giving all details of the contract e.g. sum assured or insured, premium and payment frequency, term of the contract.

Policy Conditions. The 'small print' of a policy which sets out the rights and responsibilities of the parties involved.

Policy Document. The paperwork that makes up the policy - the formal document, and any schedules or amendments.

Policy Exclusions. The policy document may, if relevant, make a clear statement regarding any instances or situations upon which the insurance company will not pay out; these are the exclusions. They may be standard or specific to a particular proposer.

Policy Fee. Generally an administration fee, usually charged monthly or annually.

Policy Lapse. When the policyholder fails to maintain premium payments, the policy will eventually lapse, or cease to operate as a 'live' policy. Depending on the type of policy, there may be residual value in the event of a claim.

Policy Year. The period from commencement to the 'anniversary' date twelve months later.

Policyholder. Generally taken to mean the owner of the policy.

Policyholders Protection Board. Established by the Policyholders Protection Act 1975 to supervise protection for policyholders in the event of an insurer failing to meet its liabilities

Pooled Investments.. Investments, such as unit trusts, where a number of people put their money together to enable them to buy a wider range of investments, thereby spreading the risk. See also 'Collective Investments'

Portability. Generally taken to refer to the ability to take pension arrangements from job to job without changing the policies involved and with the minimum penalties.

Portfolio. In financial terms, taken to mean the various securities and investments held by an individual.

Portfolio Strategy. Selection strategy with a view to pulling together investments with lowest average risks and highest returns.

Potentially Exempt Transfer. Gifts on which IHT will not be payable unless the donor dies within 7 years. If this happens, PETs become chargeable transfers and tax is calculated subject to a tapering scale, based on the value of the transfer at the date of the transfer. See 'Tapering Relief'.

Pound Cost Averaging. The term used to describe the effect of paying a fixed regular amount into a unitised investment fund where the value of units fluctuates. The amount will purchase more units when prices are low and vice versa. Over the longer term, the average cost per unit is lower than the average unit price over the period.

Power of Appointment. The ability under certain trusts to be able to change, or appoint new, beneficiaries. Power of Attorney. Appointment of an agent to act on one's behalf.

Practice Notes. Guidance issued by the Pension Schemes Office on the administration of approved occupational and personal pension schemes and limits applied to benefits. Referred to as IR12 and IR76 Practice Notes respectively.

Precatory Trust. Similar to a discretionary will, and allows an expression of wish in a will be to exercised as though written in the will itself.

Precedent. A decision used as the basis for future decisions in subsequent similar cases.

Preference Shares. Usually non-voting shares which pay out dividend before ordinary shareholders, and which will pay out first if the company goes into liquidation.

Premium. A regular payment of money into a policy to secure the contract; an alternative word is Contribution. Also describes what is paid for a share over its par value.

Premium Bonds. Purchased in units of £10 value with minimum purchase of £100, maximum £20,000. The bond numbers are entered in a monthly draw for tax-free cash prizes.

Premium Frequency. How often the premium is paid, e.g. monthly or annually.

Premium Rates. The actual cost of a policy depends on a number of factors, e.g. age, sex, mortality, which, when taken together, produce the premium rate.

Present Value. The cash sum you would need to put on deposit at a compound rate of interest to grow to a given figure at a future given date. See Future Value and Current Value.

Preservation. Granting of preserved accrued benefits in line with the minimum requirements required by the Social Security Act 1973.

Preserved Benefits. After two years as a member of an occupational pension scheme, benefits accrued to date must be preserved when leaving service. Less than two years service gives the option of taking a refund of any personal contributions, less certain deductions.

Price-Earnings Ratio. Calculated as share price divided by current earnings per share. Prima Facie. On the face of it; at first appearance.

Primary Market. The new issue market on the UK stock exchange.

Principal. The initial cash sum invested, excluding interest earned or to be earned.

Priority Rule. The rule, set out in the pension scheme's documentation, which details the order of priority of the purchase of benefits, when a scheme is wound up with insufficient funds to meet all its liabilities. See 'Actuarial deficiency', 'Underfunded'.

Private Investor. A category of investor under the financial services regulations, equating to the 'average person on the street', and to whom the highest duty of care is owed.

Private Medical Insurance. Specialist insurance to cover the cost of in-patient medical care. May also cover some out - patient expenses.

Privity of Contract. Legal concept whereby only those party to a contract may sue or be sued on the contract.

Pro Rata. Latin, meaning at a proportionate rate i.e. a rate which varies depending on the size of something. Probate. See 'Grant of Probate'.

Products. Generic term for life assurance, pensions, savings and investment policies.

Profession. An occupation or vocation needing skills and experience learned over a period of time, the practitioners of which are governed by an organised system of rules and ethics.

Professional Indemnity Insurance. Insurance intended to protect the insured from the legal consequences of the actions of an individual or a third party e.g. the policy would pay the costs incurred by any legal action and consequent award, resulting from, say, professional negligence.

Professional Investor. A category of investor under the financial services regulations, and one who would be transacting similar types of investment to the adviser.

Profit. The difference between the cost of goods and services, and their sale price.

Profit and Loss Account. A record of income and expenditure over a period of time, balanced to show profit or loss.

Profit Related Pay. Company remuneration scheme where, if registered, an agreed amount of income is tax exempt, but not NIC exempt.

Profit Sharing Schemes. The distribution of company profits in cash or share form to employees.

Projected Unit Method. A method of calculation of an actuarial valuation, where an allowance is made of projected earnings on accrued benefits. The contribution (funding) rate required is that necessary to cover the cost of all benefits accrued up to the date used in the valuation, but based on earnings projected to the date of retirement.

Promissory Note. A document stating that a sum of money will be paid to the bearer, or to a named person, or to that person's order, on a particular date or on demand. It may be a negotiable instrument.

Proposal. A formal application, perhaps for insurance or business.

Proposer. The person applying to an insurance company for a policy.

Proprietory Companies. Insurance companies owned by shareholders, so that any profit is divided by shareholders and the reserves distributed between with profits policyholders.

Prospecting. The process of seeking new business leads and contacts. Prospectus. A document which provides information to attract customers.

Protected Rights. The benefit under an appropriate personal pension, or a money purchase occupational pension scheme, which is attributable to the rebate in the NICs. There are certain restrictions placed upon these benefits, e.g. pension only (no cash), payable from age 60.

Protection Policy. A policy providing cash sums as compensation for losses, rather than one with investment content.

Proviso. A condition or qualification to a statement or action.

Proxy. A document authorising a third party to act on behalf of someone. May also be used as a term for the authorised person.

PTM Levy. A charge made on large share transactions used to fund the Panel on Takeovers and Mergers.

Punitive Damages. As Exemplary Damages. Purchased Life Annuity. A privately purchased annuity, part of which is taxed, part of which is considered to be a return of capital and so escapes tax.

Pure Endowment. An endowment policy with no insurance content i.e. pays out a value only on maturity of the policy and provides no protection cover.

Put and Call Option. See 'Cross Option'.

Put Option. An option to sell at a fixed price on or before a given future date.

Pyramid Selling. An illegal form of 'hierarchical' selling, whereby franchise agreements are sold to operators, along with stocks of the goods in question. These goods are then sold on down a distribution and sales chain. The system is viewed as illegal because the distributors tend to make the most money, leaving the final stage of salespeople in a situation where commissions earned are unlikely to pay back the payments made for the stock.

Qualifying Policy. Qualifying rules vary slightly for each type of policy, but in general terms must: be certified by the Revenue. have a 10 year term or longer. have regular premiums. have a sum assured of at least 75% of premiums paid.

Qualifying Service. The length of time needed to entitle a pension scheme member to short service benefit; currently two years. May include previous scheme service, if a transfer payment has been made into the current scheme. Quantify. Illustrate the effect of something in terms of figures.

Quarter Day. Traditional payment days at the end of each 'quarter' year. In England, Wales and Northern Ireland: 25th March (Lady Day), 24th June (Midsummer Day), 29th September (Michaelmas), 25th December. In Scotland: 2nd February (Candlemas), 15th May (Whitsuntide), 1st August (Lammas), 11th November (Martinmas).

Rally. A reversal of a downward trend of, say, share prices.

Ramp. The purchase of shares to force up share prices artificially.

Ratio. The value of one thing compared to something else.

Real Estate. Property comprising land and/or buildings. Also termed realty.

Reason Why Letter. A letter from financial adviser to client explaining the reasons behind a recommendation.

Rebasing. To ensure that capital gains tax is not paid on any inflation linked increase in the value of an asset, the purchase price is index linked from date of purchase to date of disposal. Where the asset was acquired before 31.02.1982, the purchase price is taken to be the market value as at that date; this is the rebasing - rebasing for indexation purposes.

Rebate. Either a reduction in price or a return of an overpayment. Rebate Only Personal Pension. A personal pension which is made up solely of the National Insurance rebates, payable by the DSS, where the member has elected to contract out of SERPS, by means of a personal pension. See 'Appropriate Personal Pension'.

Receiver. Someone appointed by the court, or under statute, to protect and preserve property, or to receive income from property and apply it as directed. Recession. Fall or reduction in trading volume.

Recognised Professional Body. In addition to the Self Regulatory Organisations, solicitors, insurance brokers, actuaries and accountants professional organisations are recognised by SIB as being competent to control their members' conduct when providing financial advice.

Red Book. Text of the Chancellor's speech published on budget day.

Redeem. Pay off a debt. Redeemable. An investment where one's initial investment is repayable at some future date or event. Redemption Date. The date on which a loan is to be repaid.

Redemption Penalties. When a loan under a mortgage is repaid before the agreed date, there may be penalties and fees due to cover the lenders lost investment and administration costs.

Reduced Allocation. A method of recouping initial expenses when setting up a unit linked policy, whereby only a proportion of the investment is allocated to the policy for the first few years.

Reduction in Yield. The amount by which an insurance company's charges can be expected to reduce the investment return on a policy with an investment content.

Redundant. Excess to requirements.

Reflation. Stimulation of the economy by increasing the money supply and/or by reducing taxes.

Register of Members. A company document listing details of members (shareholders) including how many and what type of shares.

Registered Individual. Out of date term for a person registered with an SRO or a RPB. PIA now uses the terms Independent Practitioner for IFAs, Product Provider for those selling packaged products, and Marketing Associate for company representatives.

Reinstate. In certain circumstances, it may be possible to 're-start', or reinstate a policy where premiums have been unpaid for some time. Conditions vary amongst companies and depending on the policies.

Reinsure. An insurer will try to spread the risk of certain large risks by seeking to reinsure, or share, the risk with other companies in exchange for part of the premium.

Reinvestment Relief. Allows CGT to be deferred when the gain is reinvested in certain qualifying investments, for instance a Venture Capital Trust or an unquoted investment including EISs and Shares listed on AIM.

Related Property. Related property means separate assets which, when valued together, have a higher value than when valued separately e.g. a pair of antique candlesticks together may be worth £1000, but separately only £300 each. For IHT purposes, when splitting related property, the value of the gift is deemed to be the relevant portion of the joint value, not the value of the item on its own e.g. in the case of the candlesticks, £500 each, rather than the £300.

Relevant Benefits. One of the proviso's for an occupational scheme to qualify for 'exempt approved' status, and meaning in broad terms any financial benefits provided on death or retirement, but not a PHI-type benefit.

Relevant Earnings. Defined in S623(2) of the Income and Corporation Taxes Act 1988. Refers generally to earned income only, schedule D and E.

Remainderman. Someone, male or female, who benefits from an estate after the death of a life tenant. Remortgage. Replacement of an existing mortgage loan with another, usually from a different lender.

Remuneration. In pension planning terms generally taken to mean the full and total earnings package i.e. salary and benefits in kind.

Remuneration Limited. A figure set out in legislation, which is used to determine whether a member of an occupational pension scheme may also contribute concurrently to a scheme governed by the new defined contribution regime.

Renewable. Generally used in connection with a type of term assurance, which runs for an initial period of years. At expiry the policyholder has the option to 'renew' the policy, at premium rates current at the time, but without need for further underwriting.

Rent. Payment by a tenant to a landlord for the use of property Repayment Mortgage. Loan repayment by means of instalments made up of capital and interest. See 'Annuity mortgage'.

Repayment payment made to cover interest or reduction in principal of a loan; monthly amount due to the lender

Requisite Benefits. The minimum scale of benefits that were originally required in order that a defined benefit scheme could contract out. This requirement was removed in November 1986, but is intended to be re-introduced (Pensions Act 1995).

Residence. A place in which a person has a home. See 'Domicile' Resident. Someone living in a country whether domiciled or not, whether a citizen of that country or not.

Residual Value. The value of property or assets remaining after e.g. repayment of a loan, or at the end of a lease agreement.

Retail Price Index. A monthly indication of the average price changes to a particular 'basket' of consumer goods, and used as a general indicator of price inflation.

Retained Benefits. Pension benefits earned in previous employments and self employments. Retirement. The state of having given up full time work.

Retirement Annuity Contract. The forerunner of the Personal Pension Plan, although there are differences between the two e.g. in terms of contributions and availability of cash sums. New RAC contracts no longer available, but existing contracts may continue.

Return on Capital. Profit before tax and interest, expressed as a percentage of capital employed.

Revaluation. A means of increasing a figure from a base date in line with inflation e.g. pensionable salary, accrued pension deferred, pension in payment, or capital gains.

Revenue Maxima. Revenue imposed ceilings on benefits and contributions when calculating maximum approvable benefits.

Revenue Undertaking. A written undertaking, provided by the scheme administrator, promising to notify the Inland Revenue in the event of certain circumstances, or before taking certain specified actions. For example, the undertaking that benefits will not exceed Inland Revenue maximum approvable limits. Reversionary. Generally, refers to property which passes on death. Also : reversionary annuity - one paid on the death of someone; : reversionary bonus - see above.

Reversionary Bonus. The general term for the annual valuation and distribution of surplus to with-profits policyholders.

Revertor to Settlor Trust. A trust where the settlor is one of the trustees, and which contains the facility for some or all of the trust property to revert, or return, to the settlor if the settlor is alive at a particular date.

Revolving Credit. Credit offered on the basis that as the debt is reduced, more may be borrowed up to the agreed limit.

Rights Issue. Issue of shares to existing shareholders in order to raise extra finance.

Risk. In insurance terms, the likelihood of a claim being made on a policy during its term. In investment terms, the balance of potential loss and potential gain as perceived by the investor; a subjective view in general.

Risk Aversion. The degree to which a client is unwilling to take on a risk.

Roll-over Relief. A tax concession which allows investors and businesses to defer the payment of CGT. For example, if proceeds from the sale of a fixed asset are re-invested, CGT is not payable until the new asset is sold.

Roll-up Funds. An offshore investment fund which does not distribute its dividends. Romalpa Clause. Often seen on purchase invoices stating that ownership of the item does not pass to the purchaser until full payment has been made.

Rule of 115. To calculate how long it will take to treble money with interest reinvested, divide the interest rate into the number 115.

Rule of 72. To calculate how long it will take to double money with interest reinvested, divide the interest rate into the number 72. For example, at 8 per cent it would take nine years to double the principal - 72 divided by eight is nine

S226. Refers to the section of the 1970 Income and Corporation Taxes Act which governed RACs, and used as a general reference to the retirement annuity.

S226a dealt with life cover.

S.32 (Finance Act 1981). The legislation which first permitted pension benefit accrued under an occupational pension scheme to be transferred to anything other than another exempt scheme. See 'Buy Out Policies'. S.A. Abbreviation for société anonyme, denoting the equivalent of PLC in France, Belgium and Luxembourg. Also abbreviation for public companies in Spain and Portugal.

Salary Sacrifice. A method of increasing input into a pension scheme by giving up existing salary or proposed salary increases, so that the sum foregone can be used as additional company contribution into an occupational pension scheme.

Sale and leaseback. An arrangement where the owner of property or assets sells and then leases back from the new owner, thus releasing capital value in exchange for the leasing overhead.

SARL. Abbreviation equivalent to private limited company in France and Italy.

Save As You Earn. A method of saving regularly from salary, by employer deduction. There are various schemes to accommodate this, some tax efficient, others merely savings administration.

Scam. Slang for fraud. Schedule. A sheet attached to a document providing additional or specific information relevant to the main purpose of the document.

Schedule D. Tax collection regime for the self employed.

Schedule E. Tax collection system for employed people.

Scheme Administrator. The person responsible for the management and administration of an occupational pension scheme. All exempt approved schemes must appoint an administrator in UK.

Scheme Rules. All pension schemes will have rules, as they are the practical, day to day guide for the operation of membership and benefits.

School Fees Insurance. A generic term for 'packages' of investment, savings and insurance put together to ensure provision of money to meet education costs. A full package will cover not only fees but incidental schooling costs and go on to cover graduate studies.

Scrip Issue. Shares issued to shareholders, in proportion to existing holdings, to increase the number of shares to make them easier to sell in smaller denominations.

Second Death. An option under a joint life policy whereby the policy proceeds are paid out on the death of the second of the insured persons.

Secondary Market. The market for existing shares on the UK stock exchange.

Section 21 Orders. Refers to Social Security Pensions Act 1975, S21. This section requires that the State additional component and GMP are revalued in line with the increase in National Average Earnings, up to

State Pension Age. Now known as S.148 orders.

Securities and Futures Authority. The SRO governing stock market, stockbrokers, merchant banks, discount houses and firms dealing in derivatives.

Securities and Investment Board. Organisation to which overall control of investor protection has been delegated by the Treasury.

Securitisation. The process of making a loan into a tradeable security by issuing a negotiable document encompassing the loan and selling it on.

Security. A bond or share certificate evidencing ownership or debt.

Segregated Fund. Pension scheme investments managed alongside, but separately from, other investments under control of a particular manager.

Selection. In underwriting terms, this is taken to mean the potential for the less fit and healthy to propose for life assurance and PHI contracts. This is particularly pertinent where members of group schemes may be offered 'underwriting free' continuation options upon leaving the scheme.

Self Administered. Simply, administering something yourself, and applied particularly in respect of certain occupational pension schemes.

Self Administered Personal Pension. Variation of the SIPP, except with the SAPP the scheme assets are invested by the insurance company and administered as a segregated or 'earmarked' fund within an appropriate fund under their management.

Self Assessment. System of collecting tax from: Individuals i.e. the self employed and some others with a tax obligation other than under PAYE. It began for individuals on 6th April 1996. Companies in respect of accounting periods finishing after 1st July 1999. Replaces the Pay and File System.

Self employed working on one's own account. For mortgage purposes this will include partners in unlimited liability businesses and professional practices.

Self Employed Pension. Generally refers to Retirement Annuities (S226 policies) and Personal Pension Plans, even though both may be taken out by those employed persons not in pensionable employment. Self Invested

Personal Pensions. A PPP where the policyholders, usually in a group, organise and manage the pension fund investments for themselves.

Self Investment. Rather than hiring specialist investment oneself; used particularly in respect of some pension arrangements. Investment of the assets of a pension scheme in the business of the employer; strictly controlled and regulated by OPB, Disclosure Regulations and PSO. Self Regulatory Organisation. Organisations established following introduction of Financial Services Act 1986 to regulate and oversee particular segments of the industry. Each SRO has its own rules and is responsible for direct supervision of its members. Originally 5 SROs but now 3: PIA, IMRO and SFA. Sequester. A court order to confiscate property.

Service. Period of employment. Settlement. An arrangement of land or other property by deed, under which a trust is created by the settlor. Settlor. A person who establishes a trust.

Share. Part of the capital of a company, grants part ownership of the company to shareholder. Can be unquoted or quoted and ordinary or preference shares. Ordinary shares normally confer voting rights.

Share Capital. The money paid (subscribed) for ordinary and preference shares in a limited company. Authorised share capital means the total amount of shares available to be issued. Issued share capital relates to the total amount of shares actually subscribed for.

Share Exchange. Owners of unit trusts may use shares they already own to make an investment without having to sell them first. This saves dealing charges.

Share Incentive Schemes. Schemes offering tax incentives to encourage employee participation in a business.

Share Option. An offer by a company, usually to its employees and directors, to buy its shares at a given price before a specified date. With a growing company this can be a valuable employee incentive.

Share Protection. Life assurance and written agreements intended to provide that on the death of a shareholder, money is available to buy the deceased's shares and ensure that control of the company is in the right hands.

Share Protection Agreements. Written agreements designed to ensure that the estate of a deceased shareholder sells to the surviving shareholders and that the survivors buy the shares.

Share Warrant. Document giving the holder the right to buy shares at a fixed price at a given future date.

Shareholders Funds. Total shareholders investment in a company, covering issued share capital, retained profit and reserves.

Short Service Benefit. The benefit provided for someone who leaves a pension scheme before Normal Retirement Date, as controlled by Social Security Act 1973 preservation requirements.

Shorts. Short dated gilts with seven or fewer years to redemption date. SICAV. French equivalent of a unit trust; 'Societé D' investissement A Capital Variable'.

Sight Bill. A bill of exchange payable when presented. Simple Trust. See 'Absolute Trust'.

Simplified Scheme. The Finance Act (No 2) 1987 introduced a simple and standard approval regime to save time on documentation and the approval process. A Simplified Defined Contribution Scheme (SDCS). Simultaneous Deaths. Where husband and wife die 'together', say, in an accident, and there is no evidence as to which of them died first, the elder is deemed to have died first. (Commorientes). In applying IHT rules, however, both are deemed to have died at the same time so that both estates retain full allowances.

Single Premium. A one time only, not repeatable single payment.

Single Premium Costing. A system of treating each premium separately and applying it as one off amount for either investment or protection purposes, charges being taken from each premium. Contrasted with Level Premium costing which results in a level premium being paid from introduction of a contract to the date of last premium, charges being taken costed at outset, usually resulting in low premium allocation in the first years of a contract. Contrasted with Single Premium costing.

Single Pricing. Method of pricing unitised investments. The purchasing and selling price of units is the same. Pricing method always used for OEICs and may be used for unit trusts.

Sinking Fund. Regular or periodic instalments saved or invested to repay a loan or purchase a replacement of an asset in the future.

Small Companies Rate. Rate of corporation tax below the standard and marginal rates.

Small Gifts Allowance. An annual IHT allowance, enabling a donor to give up to £200 per year to any number of separate individuals, which do not have to be accounted for in calculating IHT liability.

Small Self Administered Pension Schemes. To all intents and purposes an 'ordinary' pension scheme but without the involvement of a life company other than the provision of death in service benefits. 'Small' refers to schemes with less then 12 members, to which special rules apply. Société d'Investissement à Capital Variable. (SICAV) The most common type of European investment fund. Has variable capital and is similar to OEICs.

Soft Commodities. Foodstuffs traded as investments. Sole Proprietor. Sole owner of a business, usually referring to a self employed person not in partnership.

Solvency. The state of being able to pay outstanding debts on their due date.

Sort Code. In banking, the three pairs of figures usually found at the top right hand corner of cheques. Each branch has a unique identifying number to facilitate payments and receipts.

Sources & Applications of Funds Statement. Financial summary of source and uses of cash during the trading year of a business. SpA. Italian Plc - societa per azioni.

Split Capital Trusts. Investment trust company which splits the returns from income and capital growth between investors.

Split Level Investment Trust. Investment trust with both investment shares and capital shares.

Spot. Price now of something for immediate delivery.

Square Mile. City of London, 'The City'.

Stag. Someone who buys a large volume of a new issue shares in the hope of the price rising, thus giving them the chance to sell quickly at a profit.

Staggered Vesting. Phased or staged retirement, achieved by taking cash and income from different policies at different times.

Stakeholder Pensions. Introduced in April 2001 to promote wider pension saving. Must meet certain minimum standard criteria. Enable individuals without earned income to make provision for their retirement for the first time. No minimum age restriction.

Standard and Poors. American credit rating organisation, awarding ratings of AAA (triple A) to D. Anything below BB is purportedly a doubtful proposition for investment purposes.

Standard Policy Wordings. Each insurance company will have a standard framework for each of its policies. They will be personalised by use of endorsement or schedule.

Standing Order. Regular payment system whereby the purchaser of goods or services instructs their own bank to pay direct to the supplier's bank.

State Earnings Related Pension Scheme. Earnings related pension based on earnings between LEL and UEL. State Pension Age. Fixed retirement ages for men and women, currently 65 and 60 respectively. To be equalised to 65 for men and women, from April 2020 (with 10 years phasing in from 2010).

State Pensions Scheme. Actually two schemes: Basic pension, a flat rate sum paid to all with qualifying NI contributions. SERPS, based on earnings between the Lower Earnings Level (LEL) and Upper earnings Level (UEL).

State Scheme Offset. Reduction applied to benefits arising from an occupational pension. Can be a deduction from pension itself or a deduction used when calculating pension amount. Purpose is to take account of some or all of State pension member will receive.

Statement of Investment Principles. Written statement which trustees of occupational pension schemes must prepare and maintain. It details their investment objectives and principles. Must be made available to members on request.

Statement of Long-Term Insurance Practice. A code of conduct, governing the operating practices of insurance companies in respect of proposals, documentation, claims, procedures and complaints. Applies to policies taken out by UK residents.

Statement of Standard Accounting Practice. Accounting standards on different subjects. e.g. SSAP 21 deals with leasing, SSAP 24 deals with pension fund accounting.

Statute. An Act of Parliament; law enacted by Parliament.

Statutory. Relating to law contained in statute.

Statutory Discharge. The discharge provided when a member exercises the statutory right to a "cash equivalent" or transfer from a pension scheme.

Statutory Sick Pay. Payable to employed persons by their employer after 3 days sickness for up to 28 weeks.

Stock. In the UK, refers to fixed interest securities, usually issued in denominations of £100. In the USA, relates to ordinary shares.

Stock Exchange. A market where stocks and shares are bought and sold. Stock Exchange Automated Quotation System. Screen based system used by Stock Exchange market makers to advise the market of their trading prices.

Stockbrokers. Middlemen, agents, who buy and sell stocks and shares for customers.

Stop-loss i. A notional price, perhaps 20 per cent below the buying price, at which a share will be sold to avoid further losses.

Stop-loss ii. A form of reinsurance aimed at setting a ceiling on claims for the primary insurance company with the reinsurer picking up claims over that amount.

Straddle. the simultaneous purchase of put and call options in the same underlying security in the traded options market. sometimes used in the sense of the difference between the bid and offer price.

Subordinated Loan. Often an unsecured loan, and one which would only be repaid after secured loans had been repaid.

Subrogation. Recovery of an indemnity granted to an insured from the third party liable for the loss incurred.

Subscribe. As in 'subscribe to...", taken to mean to apply for shares in a new issue.

Subsidiary. A company where more than 50% of the voting shares are owned by another company. Succession. The passing of property on death of the property owner. Sum Assured. The guaranteed amount paid on death under a life assurance policy.

Sunrise Industries. New, high-tech, electronics based industries which are replacing 'sunset industry', or old style heavy industries, as the source of major employment and capital investment. Superannuation Fund. Another name for an occupational pension scheme; tends to be used in reference to 'national' schemes such as those for teachers, police, local authorities, and so on. All are governed by the same Revenue rules and regulations.

Superannuation Funds Office. Forerunner of the Pension Schemes Office. Surety. Can be used in the sense of either: the term for a person who provides personal guarantees for someone else, or a forfeitable cash sum, in the event of the non-appearance at court of a defendant.

Surrender. Cessation of premium payments and recovery of any residual value of a life policy with investment content.

Surrender Value. The amount paid to a policyholder who stops paying premiums into a policy before the expected date. The amount depends on the period the policy had run and expenses still to be recouped by the insurance company.

Swap. Exchanging one thing for another, and used in the financial arena e.g. currency swap, for trading purposes, or interest rate swap, where borrowers swap fixed rate for variable rate investments.

Switching. Transferring sums of money from one unitised fund to another. This is done on a bid to bid basis to avoid 'new money' charges when buying units at the offer price.

SWOT Analysis. A list and examination of the Strengths, Weaknesses, Opportunities and Threats inherent in any situation and course of action.

Tap Stock. Gilt edged security, not issued through the stock exchange, issued at a predetermined price.

Taper(ing) Relief. An IHT relief in connection with PETs. A PET drops out of consideration after 7 years, but death of the donor within that period gives rise to a tax liability. Tapering relief operates to reduce that liability over the 7 year period so that death in the first 3 years attracts no relief, year 4 attracts 20% relief; years 5, 6 and 7, 40%, 60% and 80% respectively. The gift 'drops out' in year 8. A CGT relief which for individuals has replaced indexation relief for the portion of an asset gain since 6th April 1998. The taper applies over a 10 year period and is different for business and non business assets.

Tax Allowance. An allowance creates reduction in taxable income, unlike a tax relief, which arises when an expense is incurred.

Tax Avoidance. Making full use of reliefs and exemptions to ensure as little tax as possible is paid. Tax Break Investment. Used to describe an investment which offers a method of tax avoidance - legally reducing the amount of tax normally paid. Tax Code. A code that tells your employer how much tax to deduct from your salary.

Tax Evasion. A criminal offence, generally involving fraud in escaping tax liability.

Tax Exempt Special Savings Accounts (TESSA). Effectively tax free deposit account, available to those over age 18. No new accounts could be opened after 6th April 1999 but contributions could be added to existing accounts, subject to constraints on timing and amount of deposits. Maximum deposit was £9,000 in total over 5 years, with maximum contribution limits applying to each year. Proceeds from TESSAs maturing after 6th April 1999 can be invested in cash ISAs in addition to normal ISA limits.

Tax Free Cash. Both occupational and personal pensions permit a certain account of cash to be taken in lieu of pension from the pension fund at retirement. This does not apply to FSAVCs, and Rebate Only pension arrangements Tax Haven. A country which legally enables individuals and companies from other countries to avoid or pay lower rates of tax by allowing them to live or base their operations there. Tax Relief. The system of exemptions and deductions on income and expenditure whereby the Tax Inspector can identify taxable income. See 'Tax Allowance'.

Tax Schedules. The different categories under which different sources of income and capital accrual are taxed.

Tax Voucher. Statement that an amount of money has been paid in tax, for example, when tax is deducted from a share dividend. No-taxpayers use the tax voucher to reclaim the tax. Tax Year. The 12 month period from 6th April to 5th April the following year.

Taxable Income. Total income minus any tax free allowances.

Temporary Cover. Stop gap insurance cover whilst permanent cover is organised. See 'Term Assurance'. Tenancy. Agreement to occupy a property, and can refer to both the agreement and the period of occupation. Tenant. A person or business who is granted a lease or tenancy.

Tenants in Common. Individual shares in a property, not automatically on a 50/50 basis. On death, the individual shares may pass under a will separately, not automatically to the other party. See 'Joint Tenancy'. Tender. A proposal to carry out a particular job or project.

Term Assurance. A life assurance policy without investment content which lasts for a specified period, provides a guaranteed sum assured in the event of death within that period, and terminates at the agreed date.

Terminal Bonus. Additional bonus which may be paid at maturity of an endowment policy or possibly on prior death of the policyholder.

Terms of Business Letter. Document which must be given to client by financial advisers prior to the transaction of business. Normally signed by client and adviser. Contents vary depending on nature of services being offered. Must include details of advisers status, polarisation, method of remuneration, adviser's obligations and complaints procedure.

TESSA only ISA. Special type of ISA used when existing TESSA matures. The capital from the matured TESSA, but not interest, can be invested, in additional to normal ISA limits. Testate. Someone who dies testate is one who has died leaving a valid will.

Testator. Person who makes a will.

Third Market. A market in the shares of smaller, unlisted companies, who do not want to go to the expense of a listing on the stock exchange, nor wanted the regulations of the AIM. Effectively replaces the 'over the counter' market.

Tied Agent. A business which deals with the policies of one insurance company only. Title. Right of ownership over property.

Title Deeds. Documents showing evidence of ownership over land. Top Hat Scheme (or Top Up Scheme). Outdated term for an Executive Pension Plan.

Top Slicing. A method of calculating income tax liability on a chargeable gain from certain packaged products.

Topping Up Loans. A loan taken in addition to an existing loan. Tort. A wrongful act or omission, other than a breach of contract, for which civil damages may be claimed.

Tracker Fund. An investment fund which invests mainly in shares which make up a particular Index with a view to duplicating its performance.

Traded Option. The right to buy or sell certain shares at a fixed price over the life of the option. The writer of the option receives the premium paid in return for the liability of being called upon to buy or sell shares at the fixed price. If the option is not exercised, it expires worthless.

Trading Period. Generally a period of 12 months over which the accounts of a business are prepared. See 'Accounting Period'.

Trail Fees. Renewal fees under unit trusts.

Training File. For IFA's, a compliance requirement, in which should be kept a record of all training and competence work.

Tranche. An instalment, one of a series. Transfer. In IHT terms, taken to mean any item of value where the ownership exchanges hands without cost. A gift.

Transfer Club. A local authority and central government facility which enables job changers to move from job to job between participating employers without the loss of fund value which may occur in the commercial transfer market.

Transfer Premium. A payment made from a contracted out defined benefit scheme to the state scheme, to buy the member back into SERPS. Is used when a member transfers from a contracted out to a contracted in scheme, which cannot accept GMP liability. The only transfer premium allowed after 6th April 1997 is the Contributions Equivalent Premium (CEP).

Transfer Value. Generally taken to mean the cash value of accrued pension benefit in an occupational pension scheme.

Treasury Bills. A short term bill of exchange, depending on discount to give it value, as it does not pay interest. Treasury Stock. Loans to the government for an initial period exceeding 90 days. See Gilts.

Trial Balance. A list of debits and credits from which the profit and loss account is prepared Trivial Pensions. A pension from an occupational pension scheme which is deemed to be too small to warrant being paid periodically and, therefore, can be paid in lump sum form, subject to preservation and contracting out requirement.

Trust. A verbal or written arrangement whereby one person or persons (trustees) agree to take care of assets and to use those assets in particular ways for particular people (beneficiaries).

Trustee. Individual or corporate body who looks after the assets of a trust and manages the trust in accordance with terms and conditions agreed verbally or in writing.

Turnover. Effectively, the sales record during the trading year.

Typical APR Example of the annual percentage rate for a given mortgage product, normally used in an advertisement in order to comply with the requirements of the Consumer Credit Act (Advertising Regulations).

Uberimae Fidei. The principle of utmost good faith, or disclosure, in completing a life insurance proposal form.

Ultra Vires. Action outside the agreed powers of a particular body. Such an action would be void.

Umbrella Fund. An offshore fund offering a variety of sub-funds allowing an investor to switch between them, e.g. different currencies, different stockmarkets. This formerly offered capital gains tax benefits, but these were removed by the 1989 Budget.

Unapproved Schemes. See 'FURBS'.

Underfunded. Generally refers to the valuation of an occupational pension fund where the actuary perceives that there are insufficient funds to support liabilities within the investment review period. Undertaking for Collective Investment in Transferable Securities. Essentially, unit trust-type investments which may be marketed in any of the European Union member countries.

Underwriting. Taking up shares not purchased by the public, for commission. Review and analysis of relevant factors affecting an insurance proposal.

Unfunded Unapproved Retirement Benefit Scheme. (UURBS) A form of unapproved pension scheme. Benefits are promised by an employer to an employee but are not pre-funded. The employer established a "book reserve" to cover the potential liability.

Uniform Accrual. Where benefits are treated as being earned equally (uniformly) throughout the period of pensionable service.

Uniform Business Rate. Tax charged on business property.

Unit Linked. A life assurance, investment or savings policy, under which the policyholder invests premiums into units in a unit trust-type investment. Performance, therefore, is dependent directly on current investment market conditions.

Unit Trust. A collective investment which invests in a range of assets e.g. equities, fixed interest and cash. Can either be general fund or more specialist investing particular type of asset e.g. property or geographical area e.g. Far East.

Unitised. See 'Unit Linked'. Units. When investing in a unit linked contract, the individual's contribution is used to buy units of equal value. These units will fall or rise in line with the underlying investments.

Unlisted Securities. Securities/shares not listed on an official stock exchange list.

Unlisted Securities Market. A market established in 1980 by the Stock Exchange for those companies for whom a full listing is not suitable. Joining and listing requirements much cheaper than the main market. Market closed June 1995.

Unsocial Hours. A financial services legislation concept, concerning times not to contact clients and prospective clients without prior approval. Generally taken to be between the hours of 9pm to 9am, Monday to Saturday, but will depend on the client and individual circumstances.

Unsolicited Calls Regulations. Financial services rules governing 'cold calling'. Uplifted Scale (Accelerated Accrual). The Revenue permits pension and cash benefits to accrue/grow at a rate in excess of the basic one sixtieth formula, provided the scale from the Practice Notes is followed.

Upper Band Earnings. Total earnings between the Lower Earnings Limit and the Upper Earnings Limit Upper Earnings Limit. See 'Lower Earnings Limit'.

Value Added Tax. An indirect tax levied on each stage of the production of most goods and services. Currently it stands at 17.5 per cent..

Valuation Inspection carried out for the benefit of the mortgage lender to ascertain if a property forms good security for a loan. Whilst the borrower may be given a copy of the valuation this is only a limited form of inspection and should not be relied upon on when deciding whether to purchase a property. Purchasers should be advised to obtain either a House or Flat Buyer's report or a full structural survey before proceeding with a purchase.

Valuation fee Fee paid by the prospective borrower for the lender's inspection of the property. Normally paid on application.

Variable Costs. Costs that vary in line with trading activity e.g. postage, stationery.

Variable Rate Interest rate that will vary over the term of the loan, normally in line with the general cost of borrowing.

Variance. The difference between planned and actual costs (and revenue).

Venture Capital Trust. A special type of investment trust on the Stock Exchange designed to provide start up or expansion capital for unquoted companies.

Vested Rights. Rights that have accrued to a person e.g. automatic preserved benefit on leaving an occupational pension scheme, after minimum of 2 years qualifying service.

Void. Something which has no legal force from the start.

Voidable. Something which, though it may continue to be valid, may be put aside and be made void, in certain circumstances.

Waiting Period. Particularly used in connection with a specified period before joining a pension scheme or becoming eligible for some other employee benefit. Not to be confused with Qualifying Service.

Waive. To give up a right to something.

Waiver of Premium. A policy option which provides for the insurance company to waive payment of the policy premium in certain circumstances e.g. sickness or disability.

Warrants. Certificates giving the holder the option to buy shares at a fixed price at a future date.

Wealth Warning. General phrase relating to the mandatory requirement to warn clients of the inherent risk in certain courses of action e.g. 'the value of investments can fall as well as rise', or, 'failure to maintain mortgages payments could result in the loss of your home'.

Whole of Life. Essentially a protection policy with investment content that remains in force until death, at which point it pays out. As the contract is capable of acquiring value, it is possible to surrender the policy. Will. A document drawn up by a testator appointing executors to administer the estate on death and laying out how the estate is to be dealt with after death. A testament is a statement relating solely to personal effects, not land.

Winding Up. The termination of a pension scheme, where assets are used to purchase the accrued liabilities of the pension scheme, either by purchasing immediate and deferred annuities, or transfer to another pension scheme.

With Profits. A class of policy which participates in the distribution of surplus in the form of bonuses. Such policies are termed 'with profits'.

Withholding Tax. Tax deducted by many countries from income payments such as dividends, interest and royalties. May be offset, reduced or negated by Double Taxation Relief.

Working Capital. The difference between current assets and current liabilities, being available to run the day to day activities of a business. Writ. Court order instructing someone either to do, or not to do, something.

Yield. A measure of the income received from an investment compared to the price paid for the investment. Normally expressed as a percentage.

Zero Dividend Preference Shares. A share with a predetermined growth rate, but which does not pay dividends.

Zero Rated. Goods (such as food, books and periodicals) taxed at the lowest, nil, band of VAT. A supplier can reclaim VAT paid in the course of production. All exports are zero rated. Do not confuse with exempt supplies.