Personal Finance Acronym Explainer

Personal Finance Terms Explained

The world of personal finance can be confusing enough without endless acronyms. DoshMaster has put together a neat explainer of the most common acronyms in personal finance, from APR to VCT, to help you make the best decision for your personal financial situation.

• AECC – American Express Corporate Card. A credit card designed for business use, helping companies manage employee spending, simplify processes, and allow for easy separation of personal and business expenses. These cards often come with benefits tailored to business needs such as travel insurance, detailed expenditure reports, and cash flow management tools.
• AER – Annual Equivalent Rate. This rate shows you how much interest you would earn if you were to deposit money in a savings account or investment for a year. It normally includes compound interest earned on interest already paid.
• AML – Anti-Money Laundering. Regulations aimed at preventing money laundering by requiring financial institutions to monitor customers’ financial activities and report suspicious transactions.
• AMEX – American Express. A financial services corporation known for its credit card, charge card, and traveller’s cheque businesses.
• APP – Authorised Push Payment (fraud). Fraud that occurs when a scammer tricks someone into willingly making a large bank transfer to an account controlled by the scammer. This is often achieved through social engineering techniques where the scammer poses as a legitimate entity.
• APR – Annual Percentage Rate. This is a measure of the actual cost of borrowing money on credit cards, loans, and mortgages, which includes both the interest rate and any fees charged.
• ARCC – American Express Rewards Credit Card. A credit card offered by American Express that allows cardholders to earn reward points on purchases, which can be redeemed for various rewards such as travel, shopping, dining, and more.
• BACS – Bankers’ Automated Clearing System. A system used to make payments directly from one bank account to another in the UK, commonly used for clearing and settling automated payments like direct debits and salary payments.
• BPR – Business Property Relief. Provides relief from Inheritance Tax (IHT) on the transfer of relevant business assets, potentially allowing business owners to pass on assets without tax liabilities.
• BTL – Buy to Let. Refers to purchasing a property specifically to rent it out, a common form of investment in the UK.
• BOE – Bank of England. The central bank of the United Kingdom, responsible for issuing currency and setting monetary policy.
• CCJ – County Court Judgment. A legal order for someone to repay a debt. Having a CCJ can negatively impact one’s credit score.
• CGT – Capital Gains Tax. A tax on the profit when you sell (or dispose of) something (an ‘asset’) that’s increased in value once you have exceeded your annual capital gains allowance.
• CHAPS – Clearing House Automated Payment System. A same-day payment system for large sums of money used by banks and financial institutions in the UK.
• CPI – Consumer Price Index. A measure of inflation that examines changes in the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
• CTC – Child Tax Credit. A benefit designed to help families with children, providing support towards the costs of raising a child.
• CTF – Child Trust Fund. A long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011. New accounts cannot be opened, but existing accounts can still be maintained.
• DRO – Debt Relief Order. A way to have your debts written off if you have a low income, very few assets, and you can’t afford to pay off the debts.
• DWP – Department for Work and Pensions. A department of the UK government responsible for welfare and pension policy.
• EIS – Enterprise Investment Scheme. A tax relief for venture capital designed to encourage investments in small, unquoted companies carrying on a qualifying trade in the UK.
• ER – Entrepreneurs’ Relief. In 6 April 2020, this relief was renamed Business Asset Disposal Relief. A tax relief provided on capital gains earned through the disposal of business.
• ESA – Employment and Support Allowance. A welfare benefit for adults under the state pension age who have a disability or health condition that affects how much they can work.
• ETF – Exchange-Traded Fund. A type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, but which can be bought and sold on a stock exchange the same as a regular stock.
• FCA – Financial Conduct Authority. The regulator for financial services firms and financial markets in the UK.
• FATCA – Foreign Account Tax Compliance Act. A US law that requires US persons, including those living outside the United States, to report their financial accounts held outside of the US, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their US clients.
• FOS – Financial Ombudsman Service. A UK service that settles complaints between consumers and UK-based businesses providing financial services.
• FSCS – Financial Services Compensation Scheme. A UK scheme that provides compensation to customers if a financial services firm is unable, or likely to be unable, to pay claims against it.
• GIA – General Investment Account. A flexible investment account that allows you to buy, manage, and sell your investments. Unlike ISAs, there’s no limit to how much you can invest, but tax may be due on profits and dividends.
• HMCTS – Her Majesty’s Courts and Tribunals Service. An executive agency of the Ministry of Justice that administers the court and tribunal system in England and Wales.
• HMRC – Her Majesty’s Revenue and Customs. The UK government department responsible for the collection of taxes.
• HP – Hire Purchase. A type of credit where goods are purchased with an initial deposit and a regular instalment plan to pay off the rest of the loan balance with the loan secured against the asset being purchased.
• HTB – Help to Buy. Government schemes aimed at helping first-time buyers get onto the property ladder, includes equity loans and ISA products.
• IFA – Independent Financial Advisor. A professional who offers independent advice on financial matters to their clients and recommends suitable financial products.
• IHT – Inheritance Tax. A tax paid on an estate (the property, money, and possessions) of someone who’s died.
• IR35 – A set of tax legislation aimed at combating tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.
• ISA – Individual Savings Account. A class of retail investment arrangements available to UK residents that qualifies for a favourable tax status.
• IVA – Individual Voluntary Arrangement. A formal and legally binding agreement between you and your creditors to pay back your debts over a period of time.
• IBAN – International Bank Account Number. A standard international numbering system developed to identify bank accounts from around the world.
• JISA – Junior Individual Savings Account. A tax-advantaged savings account in the UK designed to encourage children to save money.
• JSA – Jobseeker’s Allowance. A benefit for those who are unemployed but capable of work, seeking employment.
• KYC – Know Your Customer. A process by which banks and other financial institutions verify the identity, suitability, and risks involved with maintaining a business relationship.
• LISA – Lifetime ISA. A government scheme to help individuals save for their first home or retirement with a bonus of 25% on contributions.
• LTV – Loan to Value. A ratio of how much you are borrowing compared to the value of the property purchased, often used in assessing the risk of a mortgage.
• NI – National Insurance. Contributions collected by the UK government to fund state benefits such as the state pension and the NHS.
• NINO – National Insurance Number. A number unique to you used to track your National Insurance contributions and tax transactions.
• NS&I – National Savings and Investments. A government-backed savings organization offering a range of savings and investment products, such as premium bonds, ISAs, and income bonds.
• OEIC – Open Ended Investment Company. A type of investment fund domiciled in the UK that can adjust its fund size and investment spread according to shareholder demand and might invest in equities, bonds, or other securities.
• PAYE – Pay As You Earn. A system for collecting Income Tax and National Insurance from employment.
• PCP – Personal Contract Purchase. A type of car finance agreement where you pay a deposit, monthly payments for a set period and then have the option to buy the car at the end.
• PIP – Personal Independence Payment. A benefit in the UK designed to help adults with some of the extra costs caused by long-term ill-health or a disability. It replaced the Disability Living Allowance (DLA) for adults.
• PPI – Payment Protection Insurance. Insurance that covers debt repayments under certain circumstances, such as if the borrower loses their job or becomes ill and can’t work. It has been widely mis-sold to loan, credit card, and mortgage customers, leading to a large number of financial compensation claims.
• PRA – Prudential Regulation Authority. Part of the Bank of England, responsible for the regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms in the UK.
• PSA – Personal Savings Allowance. Introduced in April 2016, this allows individuals to earn a certain amount of interest on their savings tax-free, which varies depending on their income tax band.
• PSR – Payment Systems Regulator. A body in the UK established to oversee the payment systems. Its role is to promote competition and innovation in payment systems, ensure that they reflect users’ needs, and ensure the security and resilience of the payment infrastructure.
• REIT – Real Estate Investment Trust. A type of company that allows investors to pool their money to invest in property portfolios. Income generated from property rentals is distributed to shareholders and is subject to various tax advantages.
• RPI – Retail Price Index. A measure of inflation published monthly by the Office for National Statistics which tracks the changes in the cost of a basket of retail goods and services.
• S75 – Section 75 of the Consumer Credit Act. This provides legal protection for consumers on credit card purchases costing between £100 and £30,000, offering a form of insurance in cases where goods are faulty, not as described, or the supplier fails to deliver by making the credit card provider jointly and severally liable for any breach of contract by a trader.
• SAP – Statutory Adoption Pay. Payments made to eligible employees who are taking time off to adopt a child. It ensures employees receive pay during their adoption leave.
• SEIS – Seed Enterprise Investment Scheme. Offers tax reliefs to individual investors who buy new shares in small, early-stage companies in the UK. It aims to encourage entrepreneurship and investment in startups.
• ShPP -Statutory Shared Parental Pay. Allows eligible parents to share up to 50 weeks of leave and up to 37 weeks of pay if they meet certain work and pay criteria.
• SIPP – Self-Invested Personal Pension. A type of pension that allows the individual to make their own investment decisions from a wide range of assets.
• SITR – Social Investment Tax Relief. A tax relief designed to encourage individuals to support social enterprises and charity organizations by investing in them. Investors can receive a reduction in their tax bill in return for buying shares or securities in qualifying organizations, making it easier for these enterprises to raise money to grow and achieve their social impact.
• SMP – Statutory Maternity Pay. A payment for eligible women that covers 39 weeks, usually paid at 90% of their average weekly earnings for the first six weeks followed by a lower rate for the remaining weeks or 90% of their earnings, whichever is lower.
• SPL – Shared Parental Leave. Allows parents to share pay and leave in the first year after a child is born or placed in the family. It can be taken in blocks separated by periods of work or all in one go.
• SPP – Statutory Paternity Pay. Offered to eligible fathers or partners to help them take time off before and/or after the birth of a child. It is paid for one or two weeks.
• SASS – Small Self-Administered Scheme. A defined contribution pension scheme that’s typically established and managed by directors of a company for their benefit.
• SSP – Statutory Sick Pay. Financial support for eligible employees who are unable to work due to illness. It is paid by the employer for up to 28 weeks.
• SDLT – Stamp Duty Land Tax. This is a tax paid on purchases of properties over a certain price threshold in England and Northern Ireland. The rate of SDLT varies based on the price of the property and whether it is residential or commercial.
• SWIFT – Society for Worldwide Interbank Financial Telecommunication. Provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized environment.
• TDS – Tenancy Deposit Scheme. Protects tenancy deposits and helps to resolve disputes between landlords and tenants regarding the return of the deposit.
• TFLS – Tax-Free Lump Sum. Refers to the amount that can be taken out of a pension scheme without paying tax, typically up to 25% of the pension pot.
• UC – Universal Credit. A benefit designed to support those who are on a low income or out of work, consolidating six previous benefits into a single payment made monthly.
• UCITS – Undertakings for Collective Investment in Transferable Securities. A regulatory framework that allows for the distribution of collective investment schemes in the internal market of the European Union.
• VAT – Value Added Tax. A consumption tax of up to 20% added to most products and services sold by VAT-registered businesses.
• VCT – Venture Capital Trust. A tax-efficient UK closed-ended collective investment scheme designed to provide private equity capital for small expanding companies and capital gains for investors in the form of tax reliefs.
• TVL – Television License. Required in the UK to watch or record live TV broadcasts and to use BBC iPlayer. The fee collected is used to fund the BBC’s radio, TV, and online services.
• WTC – Working Tax Credit. A tax credit offered in the UK designed to top up the earnings of people on low incomes, including those who do not have children.

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