UK and Scottish tax terms, explained plainly.

Written and reviewed by Kamran Ishaq FCCA, Founder & CEO · Reviewed 16 October 2026 · Sources: HMRC, Revenue Scotland, Companies House

Additional Dwelling Supplement (ADS)Scotland

An extra charge on top of LBTT when you buy an additional residential property in Scotland, such as a second home or buy-to-let, calculated on the whole purchase price. Read more

Adjusted net income

Your total taxable income less gross personal pension contributions and Gift Aid. It decides whether the Personal Allowance tapers and whether the High Income Child Benefit Charge applies. Read more

Annual exempt amount

The amount of capital gains each person can make in a tax year before Capital Gains Tax is due. Read more

Annual Investment Allowance (AIA)

A capital allowance that lets a business deduct the full cost of most plant and machinery from its profits in the year of purchase, up to an annual limit. Read more

Business Asset Disposal Relief (BADR)

A reduced Capital Gains Tax rate on selling all or part of a trading business or qualifying company shares, up to a lifetime limit. Formerly Entrepreneurs' Relief. Read more

Confirmation statement

The annual filing that confirms a company's details held at Companies House — officers, shareholders and registered office — are correct. Read more

Construction Industry Scheme (CIS)

The scheme under which contractors deduct tax from payments to construction subcontractors and pass it to HMRC as an advance towards the subcontractor's tax. Read more

CT600

The Company Tax Return a limited company files with HMRC each year, setting out its taxable profit and Corporation Tax. Read more

Director's loan account

A record of money a director takes from, or lends to, their company other than salary, dividends or expense repayments. An overdrawn account can trigger s455 tax. Read more

Dividend allowance

The amount of dividend income each person can receive tax-free in a tax year. Dividends above it are taxed at UK dividend rates, including for Scottish taxpayers. Read more

Final declaration

Under Making Tax Digital for Income Tax, the year-end submission that confirms your total income and replaces the Self Assessment return. Read more

Gift Aid

A scheme that lets charities reclaim basic-rate tax on donations from UK taxpayers. Donors paying above the basic rate claim extra relief themselves. Read more

High Income Child Benefit Charge (HICBC)

A tax charge that claws back Child Benefit from the higher earner in a household once their adjusted net income passes a threshold. Read more

IR35

The off-payroll working rules that tax a contractor working through their own company like an employee when the engagement is employment in all but name. Read more

Land and Buildings Transaction Tax (LBTT)Scotland

Scotland's tax on buying land and property, collected by Revenue Scotland. It replaced Stamp Duty Land Tax in Scotland in 2015. Read more

Making Tax Digital (MTD)

HMRC's programme requiring digital records and software submissions — already in place for VAT and being extended to sole traders and landlords for Income Tax. Read more

Marriage Allowance

Lets a spouse or civil partner who does not use all their Personal Allowance transfer part of it to a partner who pays basic-rate tax. Read more

Nil-rate band

The value of an estate that can pass free of Inheritance Tax. Unused nil-rate band can transfer to a surviving spouse or civil partner. Read more

Non-domestic ratesScotland

Scotland's business rates: a tax on business property based on its rateable value, collected by the local council. Read more

OSCRScotland

The Scottish Charity Regulator, which keeps the Scottish Charity Register and receives each charity's annual return and accounts. Read more

Payments on account

Two advance instalments towards next year's Self Assessment bill, due on 31 January and 31 July, each normally half of the previous year's bill. Read more

Personal Allowance

The amount of income you can receive each tax year before Income Tax is due. It is withdrawn gradually once adjusted net income passes £100,000. Read more

Residence nil-rate band (RNRB)

An extra Inheritance Tax allowance when a home passes to children or grandchildren, tapered away for larger estates. Read more

Revenue ScotlandScotland

The tax authority for Scotland's devolved taxes — LBTT and Scottish Landfill Tax. Scottish income tax is still collected by HMRC. Read more

Salary sacrifice

An agreement to give up part of your salary in return for a benefit, most often an employer pension contribution, saving Income Tax and National Insurance. Read more

Scottish taxpayerScotland

Someone whose main place of residence is in Scotland for the tax year. Scottish taxpayers pay Scottish income tax rates on earnings, pensions, profits and rent, and have tax codes starting with S. Read more

Section 24

The rule that stops individual landlords deducting mortgage interest from rental profit, giving a basic-rate tax credit instead. Read more

Section 455 tax (s455)

A temporary tax a close company pays on a loan to a director or shareholder that is still outstanding nine months after the year end, refunded once the loan is repaid. Read more

Self Assessment

HMRC's system for collecting Income Tax that is not taken at source, through an annual tax return. Online returns are due by 31 January after the tax year. Read more

Small Business Bonus Scheme (SBBS)Scotland

Scotland's main relief from non-domestic rates for small business premises, giving up to 100% relief depending on rateable value. Read more

Statutory Residence Test

The test that decides whether someone is UK resident for tax in a given year, based on days spent in the UK and ties to it. Read more

Tax code

The code HMRC gives an employer or pension provider to tell it how much tax-free pay to allow through PAYE, such as 1257L or S1257L. Read more

Trading allowance

A £1,000 tax-free allowance for gross income from self-employment, casual work or selling things you make or buy to sell. Read more

Unique Taxpayer Reference (UTR)

The ten-digit reference HMRC issues when you register for Self Assessment or set up a company, needed to file returns. Read more

VAT registration threshold

The level of taxable turnover in any rolling 12 months above which a business must register for VAT. Read more