Money Terms in Plain English.

A

Access to WorkApplies in England, Scotland, WalesEnglandScotlandWales

A government grant that helps disabled people get or keep a job.

In plain English:If a health condition or disability makes work harder, the government can pay for things like special equipment, a support worker or taxis to work.

MoreLess about Access to Work

It's run by the Department for Work and Pensions, and you apply yourself, either before you start a job or once you're in one. It can pay for things like special equipment, a support worker, a job coach or taxis if you can't use public transport.

It's a grant, so you don't pay it back, and it doesn't affect any other benefits you get.

For example: Someone with a hearing condition starting an office job could get a grant towards a speech-to-text app and a note-taker for meetings.

Accounting period

The stretch of time a company works out its profit and tax for, usually a year.

In plain English:A company picks a stretch of time, normally a year, and adds up everything it earned and spent in it. Its tax is worked out on that.

MoreLess about Accounting period

It's usually the company's twelve-month financial year, though a new company's first one can be shorter or longer. Corporation Tax is worked out on the profit made in it.

Both the tax and the Company Tax Return are due set times after it ends, so knowing when yours finishes tells you when to pay.

For example: A company whose year ends on 31 March works out its tax on the profit made from April to March.

Accruals basisUK

Counting business income when it's invoiced, not when it's paid.

In plain English:You count money in the books on the day you send the bill, even if the customer pays you weeks later.

MoreLess about Accruals basis

Income counts on the day you send the invoice, and costs count when you owe them, even if the money moves weeks later. It gives a truer picture of how a business did in a period.

Companies always use it. Sole traders can choose it instead of the simpler cash basis.

For example: A designer invoices a client in March but gets paid in May. Under the accruals basis, the money counts as March's income.

Article inside Foliopeak: Writing Off Bad Debts: When a Customer Doesn't Pay

Accumulation and income units

Two versions of a fund: one pays its income out to you, the other ploughs it back in.

In plain English:With income units, the fund pays its earnings into your account. With accumulation units, it keeps them and buys more of the fund for you.

MoreLess about Accumulation and income units

They're two versions of the same fund holding the same investments. Income units pay out dividends and interest as cash, while accumulation units put them back in, so the unit price rises instead.

Outside an ISA or pension, reinvested income is still taxable in the year it's earned, even though you never received it as cash.

For example: Two friends put the same amount in one fund. One picks income units and gets a payment every few months. The other picks accumulation units and gets no payments, but their units grow in value faster.

Article inside Foliopeak: Income vs Accumulation Units

Active and passive investing

Paying a manager to try to beat the market, or simply copying the market for less.

In plain English:An active fund pays experts to pick what to buy. A passive fund just buys everything in a market, like the whole FTSE, and costs much less.

MoreLess about Active and passive investing

An active fund has a manager who picks investments, trying to beat a market. A passive fund simply buys everything in an index, like the FTSE 100, to match it.

Passive funds usually charge much less. Over long periods, many active funds don't beat their index once their higher fees are taken off.

For example: A tracker fund that follows the FTSE 100 might charge a small fraction of what an active UK fund charges, while aiming for the same market.

Article inside Foliopeak: Funds: ETFs, Index Trackers, and OEICs

Activist investor

An investor who buys a big stake to push a company to change.

In plain English:Someone buys a large part of a company, then uses that power to push the bosses into making changes they think will raise its value.

MoreLess about Activist investor

They buy a large enough slice of a company to have a real say, then push in public or in private for changes they think will raise its value.

Typical demands are new bosses, selling off parts of the business or paying more to shareholders.

For example: An investor buys a big stake in a struggling retailer and pushes the board to sell its loss-making overseas arm.

Additional permitted subscription (APS)UK

An extra ISA allowance for a widow, widower or surviving civil partner.

In plain English:When someone with ISAs dies, their husband, wife or civil partner gets an extra one-off ISA allowance, so the savings can stay tax-free.

MoreLess about Additional permitted subscription (APS)

When someone dies, their husband, wife or civil partner gets an extra one-off ISA allowance, worth what the ISAs of the partner who died were worth. It's on top of their own yearly allowance.

While the estate is dealt with, those ISAs can stay tax-free for up to 3 years.

For example: If a partner dies with ISAs worth £60,000, the survivor can put an extra £60,000 into their own ISA, as well as their usual yearly amount.

Article inside Foliopeak: When Someone Close Dies: The Money in the First Months

Additional property surchargeApplies in England, Northern IrelandEnglandN. Ireland

Extra stamp duty when you buy a home while already owning another one.

In plain English:If you already own a home and buy another one, you pay more stamp duty than someone buying their only home.

MoreLess about Additional property surcharge

Buyers who already own a home anywhere, and are buying another, like a second home or a buy-to-let, pay an extra 5% on top of the usual rate in every band.

If you're replacing your main home, you may be able to get the extra back once the old one is sold. Scotland and Wales have their own versions.

For example: Someone who owns a flat and buys a holiday cottage pays the higher rates on the cottage, because it isn't replacing their main home.

Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)

Article inside Foliopeak: Stamp Duty Land Tax

Additional State Pension (SERPS and S2P)UK

An extra State Pension that employees built up before the current system began.

In plain English:Before the new State Pension started, employees could build up a second, extra State Pension on top of the basic one. Some people still get it.

MoreLess about Additional State Pension (SERPS and S2P)

Employees built it up before April 2016, first under SERPS and later the State Second Pension. People who were contracted out built up less of it.

It's paid on top of the basic State Pension, or counted in the starting amount of the new State Pension for people who reached State Pension age later.

For example: Someone who worked in an office through the 1980s and 90s may get extra State Pension each week from what they built up in SERPS.

Adjusted net incomeUK

Your income for the year after pension payments and charity gifts are taken off.

In plain English:Start with all your income, then take off what you paid into pensions and gave to charity. Some tax rules use this figure to decide what you get.

MoreLess about Adjusted net income

Start with your taxable income for the year, then take off what you paid into pensions and gave through Gift Aid, each with the basic-rate tax relief added on.

It decides whether you start losing your Personal Allowance above £100,000, and whether the High Income Child Benefit Charge applies. Paying more into a pension lowers it.

For example: Earn £65,000 with £5,000 (tax relief included) going into a personal pension, and your adjusted net income is £60,000.

Article inside Foliopeak: Child Benefit, and the Charge That Takes It BackGame: Cliff Edge

Administrator (estates)

The person who sorts out someone's money and belongings after they die without a will.

In plain English:When someone dies without a will, a close relative is usually chosen to collect what they owned, pay what they owed and share out the rest.

MoreLess about Administrator (estates)

When someone dies without a will, or no executor is able to act, a close relative usually applies to the court to be the administrator. They get a document called letters of administration.

They then collect what the person owned, pay their debts and taxes, and share out the rest under the intestacy rules.

For example: A man dies without a will. His daughter applies for letters of administration so she can close his bank accounts and sell his car.

Article inside Foliopeak: What Actually Happens When You Die

Adult Disability PaymentUK

Scotland's version of PIP, for adults whose health affects daily life or getting around.

In plain English:In Scotland, adults whose health makes daily tasks or getting around harder can get this weekly money, instead of PIP.

MoreLess about Adult Disability Payment

It's Scotland's replacement for Personal Independence Payment, paid by Social Security Scotland to adults whose health or disability affects daily living or getting around.

Like PIP, it has a daily living part and a mobility part. It doesn't depend on your income or savings, and you can work while getting it.

For example: An adult in Glasgow with arthritis who struggles to cook and walk far might get both the daily living and mobility parts.

See also: Personal Independence Payment (PIP)

AER (annual equivalent rate)

A savings rate shown in a standard way, so accounts can be compared fairly.

In plain English:Banks add interest in different ways. AER shows what you'd earn in a year in one standard way, so you can line up accounts side by side.

MoreLess about AER (annual equivalent rate)

AER shows a savings rate as if interest were added once a year, including interest earned on interest. That way, accounts paying monthly and yearly can be compared fairly.

It's the number to use when comparing savings accounts. A bonus rate that ends partway through the year is included in it.

For example: Interest of 4.89% a year, paid monthly, works out at an AER of 5%, because each month's interest earns interest too.

Article inside Foliopeak: Savings Accounts: Comparing Them Properly

Affordability check

A lender making sure you could keep up the repayments before it lends.

In plain English:Before lending, a lender looks at your income and bills to see if you could really pay it back, even if rates went up.

MoreLess about Affordability check

A lender looks at your income, spending and other debts to decide whether you could keep up the repayments. For a mortgage, it often checks whether you could still cope if interest rates rose.

It can mean showing payslips and bank statements. Failing one is the lender's way of saying the loan would be too much for you.

For example: A couple earn enough for a big mortgage on paper, but their childcare costs mean the lender offers them less.

Article inside Foliopeak: Fixes, Trackers, and What Overpaying Really Does

AGM (annual general meeting)

A company's yearly meeting, where shareholders can ask questions and vote.

In plain English:Once a year, a company holds a meeting where its owners, the shareholders, can question the bosses and vote on big decisions.

MoreLess about AGM (annual general meeting)

Once a year, a company's shareholders can question the directors and vote on things like directors' pay and who sits on the board.

If you hold shares through a platform, you can usually ask it to let you vote or attend.

For example: A shareholder in a supermarket chain votes against the bosses' pay deal at the AGM through their investment platform.

Agricultural Property ReliefUK

A cut in Inheritance Tax on farmland and farm buildings.

In plain English:When farmland or farm buildings are passed on after death, less Inheritance Tax is due on them, so farms don't have to be sold to pay the bill.

MoreLess about Agricultural Property Relief

It cuts Inheritance Tax on farmland and farm buildings that qualify, so farms don't have to be sold to pay the bill. Since 6 April 2026, property that qualifies for full relief gets it on the first £2,500,000, shared with Business Relief.

Above that amount, the relief is 50%, so some tax can be due on larger farms.

For example: A family farm passed to a son after his mother dies may pay no Inheritance Tax on the land up to the allowance, and less tax on any value above it.

Article inside Foliopeak: Business Relief and Farm Relief From April 2026

AIM (Alternative Investment Market)UK

The London stock market for smaller, growing companies.

In plain English:A part of the London Stock Exchange for smaller companies. The rules are lighter, so the shares can be riskier.

MoreLess about AIM (Alternative Investment Market)

It's the London Stock Exchange's market for smaller, growing companies, with lighter rules than its main market. That makes it easier for young firms to list, but the shares can be riskier.

AIM shares can be held in an ISA, carry no stamp duty, and some qualify for Business Relief from Inheritance Tax.

For example: A small tech firm floats on AIM to raise money to grow, and investors can buy its shares inside their ISA.

Airdrop (crypto)

Free crypto tokens sent to people's wallets, often to promote a new coin.

In plain English:A new crypto project gives away free tokens to lots of wallets to get people interested. Some are scams, so be careful.

MoreLess about Airdrop (crypto)

A new crypto project sends free tokens to lots of wallets, usually to get attention. HMRC can tax them as income when they arrive if you did something to get them, and selling them later can make a capital gain.

Fake airdrops are a common way to trick people into connecting their wallet to a scam site that then empties it.

For example: Someone gets a message saying they've won free tokens and must connect their wallet to claim them. It's a scam that drains their coins.

Article inside Foliopeak: CryptocurrencyGame: Scam or Legit

Algorithmic trading

Trading done automatically by computer programs following set rules.

In plain English:Instead of a person pressing buy or sell, a computer does it based on rules, often far faster than any person could.

MoreLess about Algorithmic trading

Large funds use it to break big orders into small pieces so they don't move the price.

Some private investors use automated tools too, but a strategy that worked in the past can fail in a different market.

For example: A fund needs to buy 2 million shares, so a program buys small amounts through the day to avoid pushing the price up.

All-time high

The highest price a share, index or coin has ever reached.

In plain English:The highest price something has ever been. Markets often reach new highs, so it isn't on its own a sign a fall is coming.

MoreLess about All-time high

It's the highest price a share, index or coin has ever reached.

Because markets tend to grow over the years, they often reach new all-time highs. One on its own isn't a sign that a fall is coming.

For example: The FTSE 100 reaching a new all-time high in the news simply means it's higher than it has ever been before.

Article inside Foliopeak: Stocks, Shares and Equities

Allowable expensesUK

Business costs you can take off your income before tax is worked out.

In plain English:Money you spend only to run your business, like tools or travel to clients, comes off your income before your tax is worked out.

MoreLess about Allowable expenses

These are business costs taken off your income before tax is worked out, so you only pay tax on your profit. For a sole trader, they must be wholly and exclusively for the business.

If a cost has a private side, like a phone you also use at home, only the business part counts.

For example: A self-employed plumber earning £40,000 who spends £8,000 on tools, van costs and parts pays tax on £32,000.

Article inside Foliopeak: What You Can - and Can't - Claim As a Business ExpenseCalculator: Sole Trader Tax Calculator

Alpha

How much better or worse an investment did than the market it is measured against.

In plain English:If a fund made more than the market it is compared with, that extra is its alpha. If it made less, the alpha is negative.

MoreLess about Alpha

It measures how much better or worse an investment did than its benchmark, after allowing for the risk it took.

Positive alpha is the usual sign that a fund manager added value. Negative alpha means you'd have done better in a cheap tracker.

For example: If a fund grew 9% in a year when its benchmark grew 7%, and it took similar risk, its alpha is about 2%.

Alphabet sharesUK

Different classes of shares in a company, so dividends can be paid at different rates.

In plain English:A company gives its owners different types of shares, called A, B and so on, so it can pay each type a different dividend.

MoreLess about Alphabet shares

A company issues different classes of shares, like A and B shares, so it can pay dividends at different rates to different shareholders.

Family companies use them to share profits, but HMRC rules can still tax the income as the giver's own, especially when it goes to a child or is a gift between partners.

For example: A husband and wife own a company through A and B shares, so its profits can be paid to each in different amounts each year.

Article inside Foliopeak: Salary vs Dividends for Company Directors

Altcoin

Any cryptocurrency other than Bitcoin.

In plain English:Bitcoin came first, so every other cryptocurrency is called an altcoin. Most are smaller and riskier.

MoreLess about Altcoin

Any cryptocurrency other than Bitcoin, like Ether or Solana. There are thousands of them.

Many are small and hard to sell, and they tend to fall in value far more sharply than Bitcoin when markets turn.

For example: Someone buys a little-known altcoin after seeing it trend online, and its price halves within a week.

Article inside Foliopeak: Cryptocurrency

Alternative investments

Investments outside the usual shares, bonds and cash, such as property or art.

In plain English:Things people invest in apart from shares, bonds and cash, like property, gold, art or private companies. They can be harder to sell.

MoreLess about Alternative investments

Anything outside shares, bonds and cash, like property, private equity, hedge funds, commodities, infrastructure or collectibles.

They can help spread risk, but they're often harder to sell quickly and more expensive to hold.

For example: Someone who owns mostly shares adds a property fund and some gold, so not everything rises and falls together.

Amortisation

Spreading the cost of things you can't touch, like software, over the years they're used.

In plain English:A business spreads the cost of something you can't touch, like software or a brand name, over the years it is used, rather than all at once.

MoreLess about Amortisation

A business spreads the cost of something it can't touch, like a patent, software or goodwill, over the years it's used, just as depreciation does for machines.

The same word is also used for paying off a loan bit by bit, like a repayment mortgage.

For example: A company buys software for £50,000 that it expects to use for five years, so it counts £10,000 of the cost each year.

See also: Depreciation

Analyst consensus

The average of what analysts expect a company to earn.

In plain English:Lots of analysts guess what a company will earn. Their average is what results get measured against.

MoreLess about Analyst consensus

Saying a company beat or missed expectations usually means it did better or worse than the consensus.

Consensus figures are put together by data firms and change as analysts update their forecasts.

For example: The consensus is £50 million of profit. The company reports £55 million, a beat, and its shares rise.

Analyst ratings (buy, hold, sell)

An analyst's verdict on a share, such as buy, hold or sell.

In plain English:Analysts at banks study companies and say whether they'd buy, hold or sell the shares. They're often wrong, and sell ratings are rare.

MoreLess about Analyst ratings (buy, hold, sell)

Many analysts work for banks that also do business with the companies they rate, which can make them slow to say sell.

Words vary: outperform and overweight roughly mean buy, and underperform and underweight roughly mean sell.

For example: Ten analysts cover a company: seven say buy, two say hold and one says sell. The share still falls after weak results.

Anchoring

Fixing on one number, like the price you paid, and judging everything against it.

In plain English:Getting stuck on one number, like the price you paid for a share, and letting it decide what you do, even when it no longer matters.

MoreLess about Anchoring

It's when one number, like the price you paid for a share or a house's asking price, sticks in your mind and you judge everything against it, even when it no longer tells you much.

It can stop people selling a falling share until it gets back to what they paid, which it may never do.

For example: Someone refuses to sell a share for less than the £5 they paid, even though the business has gone downhill and the price keeps falling.

Angel investor

A wealthy person who puts their own money into a young company.

In plain English:A wealthy person who puts their own money into a young company early on, in return for a share of it.

MoreLess about Angel investor

A wealthy individual who puts their own money into a start-up, usually in its early days, in return for a share of it.

Angels often bring advice and contacts as well as money. Many of their investments fail, so they spread their money across several.

For example: A retired businesswoman invests £25,000 in a friend's new café chain in return for a tenth of the company.

Annual accounts (company)UK

The yearly accounts a limited company must file, even if it made no money.

In plain English:Every year, a limited company must send its accounts to Companies House, showing what it earned, spent, owns and owes, even if it made nothing.

MoreLess about Annual accounts (company)

Every limited company must file accounts at Companies House each year and send them to HMRC with its Company Tax Return, even if it made no money.

Small companies can file simpler versions. Filing late brings automatic fines.

For example: A one-person company that had a quiet year still has to file its accounts on time, or it gets a late filing penalty.

Annual allowance (pensions)UK

The most you can pay into pensions in a year and still get tax relief.

In plain English:There is a yearly limit on how much can go into your pensions with tax relief. Paying in more than this brings a tax charge.

MoreLess about Annual allowance (pensions)

It's the most that can be paid into your pensions in a tax year with tax relief: £60,000, counting everything you and your employer pay in. You only get relief on your own payments up to what you earn.

It's lower for the highest earners, which is called the taper. Allowance you didn't use in the last three years can be carried forward.

For example: Most people can have up to £60,000 a year paid into their pensions with tax relief, but their own payments only get relief on up to what they earn.

Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)

Article inside Foliopeak: The Pension Annual Allowance

Annual allowance chargeUK

Tax you pay if more goes into your pensions in a year than the allowance.

In plain English:If you, your employer and the tax relief together put more into your pensions in a year than the limit, you pay tax on the extra.

MoreLess about Annual allowance charge

If more goes into your pensions in a year than the annual allowance, after any carry forward, you pay tax on the extra at your own income tax rate, as if it were income.

You can ask your pension to pay it from your pot, which is called scheme pays.

For example: A doctor whose pension grows a lot in one year finds they've gone over the allowance and owes tax on the extra.

Article inside Foliopeak: The Pension Annual Allowance Taper

Annual exemption (gifts)UK

The amount you can give away each year free of Inheritance Tax.

In plain English:Each year you can give away a set amount, and it will never count for Inheritance Tax, however soon you die afterwards.

MoreLess about Annual exemption (gifts)

£3,000 of gifts in a tax year are free of Inheritance Tax straight away, however soon you die afterwards. If you didn't use last year's, you can carry it forward once.

Gifts of up to £250 each to other people are free of it too.

For example: You can give away £3,000 each tax year free of Inheritance Tax, plus last year's if you didn't use it.

Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)

Article inside Foliopeak: The Seven-Year Rule and Gifting to Children

Annual Investment Allowance (AIA)UK

Lets a business take the full cost of new equipment off its profit straight away.

In plain English:When a business buys equipment like machines or computers, it can take the whole cost off its profit in the same year, so it pays less tax now.

MoreLess about Annual Investment Allowance (AIA)

Any business, including sole traders and partnerships, can take the full cost of most equipment and machinery off its profit in the year it buys it, up to a yearly limit.

It means less tax now, rather than spreading the relief over many years. Cars don't qualify.

For example: A builder spends £20,000 on a new digger and takes the whole £20,000 off that year's profit.

Article inside Foliopeak: Depreciation and Capital Allowances: How Equipment Comes Off Your Tax

Annual management charge (AMC)

A yearly fee for running a fund or pension, taken as a share of its value.

In plain English:A fee a fund takes each year to run your money, worked out as a slice of what your money is worth.

MoreLess about Annual management charge (AMC)

A yearly fee for managing a fund or pension, taken as a percentage of its value. It's taken from your money automatically, so you may not notice it.

Pension statements often quote it. For funds, the ongoing charges figure (OCF) includes it along with other running costs.

For example: A fund with a 1% charge takes £100 a year from a £10,000 investment, whether the fund goes up or down.

Article inside Foliopeak: Fund Charges - OCF, Platform Fees and the Rest

Annual pension statementUK

The yearly statement a pension sends you, showing your pot and what it might pay.

In plain English:Once a year, each pension sends you a letter showing how much is in your pot and a guess at what it might pay you when you retire.

MoreLess about Annual pension statement

Once a year, each pension shows you what's in your pot, what was paid in, the charges and a guess at what it might pay in retirement.

It's a good time to check your contact details and who you've named to get your pension if you die.

For example: Someone reads their statement, sees the charges are high and the forecast is low, and decides to look at moving it.

Article inside Foliopeak: Do You Know What's in Your Pension?

Annuity

A guaranteed income for life, bought with your pension savings.

In plain English:You hand over some or all of your pension pot to an insurer, and it pays you a fixed income for the rest of your life, however long you live.

MoreLess about Annuity

You use some or all of your pension pot to buy an income from an insurer, paid for life or for a set number of years. It doesn't run out, however long you live.

Once you've bought one, it usually can't be undone, so it's worth shopping around for the best rate.

For example: You swap your pension pot for an income paid every year for the rest of your life. How much you get depends on your age, your health and rates when you buy.

Article inside Foliopeak: Drawdown vs Annuity, in Plain English

Anti-money laundering checks (AML)

The checks firms must make by law to stop criminal money being moved.

In plain English:Banks and other firms must check who you are and where your money came from, so criminals can't hide or move stolen money.

MoreLess about Anti-money laundering checks (AML)

By law, banks, solicitors, estate agents and investment firms must check who you are and ask where money came from, to stop criminals moving it.

The checks can delay or block a payment, and firms aren't allowed to tell you if they've reported a concern.

For example: When someone buys a house, their solicitor asks for bank statements showing where the deposit came from.

See also: KYC (Know Your Customer)

APP fraud (authorised push payment)UK

Being tricked into sending your own money to a fraudster.

In plain English:A scammer pretends to be your bank, a firm or someone you know, and talks you into sending them money yourself. Banks now often have to pay it back.

MoreLess about APP fraud (authorised push payment)

A fraudster tricks you into sending them money yourself, often pretending to be your bank, a firm or someone you know.

Since 7 October 2024, UK banks and payment firms must pay back most people tricked into paying by Faster Payments or CHAPS, up to a limit.

For example: Someone gets a text from their "bank" saying their account is at risk and moves money to a new account. The bank now has to refund most of it.

Article inside Foliopeak: Spotting an Investment Scam

Apprenticeship LevyUK

A tax on big employers' pay bills that pays for apprenticeship training.

In plain English:Large employers pay a small tax on their total wage bill. They can then use that money to pay for apprentices' training.

MoreLess about Apprenticeship Levy

Employers with a yearly wage bill of more than three million pounds pay a tax of 0.5% of it.

Employers in England can spend that money on apprenticeship training through a government account. Unused money can be lost after a while.

For example: A large retailer pays the levy and uses the money to train its shop staff as managers through apprenticeships.

APR (annual percentage rate)

The yearly cost of borrowing, fees included, so loans can be compared.

In plain English:APR adds the interest and the fees together to show the full yearly cost of a loan or card, so you can see which is really cheaper.

MoreLess about APR (annual percentage rate)

It's the yearly cost of borrowing, including interest and any compulsory fees, so loans and cards can be compared fairly.

A representative APR is the rate most people accepted get. Some are offered a higher one, depending on their credit record.

For example: Two £5,000 loans with the same monthly payment can cost very different amounts once fees are added; the one with the lower APR costs less over a year.

Article inside Foliopeak: Credit Cards and Borrowing: What It Really Costs

APRC (annual percentage rate of charge)UK

A mortgage's yearly cost with fees included, worked out the same way by every lender.

In plain English:Like APR, but for mortgages. It shows the full cost over the whole mortgage, fees included, so you can compare lenders fairly.

MoreLess about APRC (annual percentage rate of charge)

It's the yearly cost of a mortgage with its fees included, worked out as if you kept it for the whole term, including after any fixed or tracker deal ends.

Every lender works it out the same way, so you can compare, but it assumes you never switch deals, which most people do.

For example: A mortgage with a low fixed rate for two years can have a much higher APRC, because it assumes you'll pay the lender's standard rate afterwards.

See also: Key Facts Illustration (ESIS)

Arbitrage

Buying something cheaply in one place and selling it for more somewhere else at the same time.

In plain English:Spotting that something costs less in one place than another, buying it cheap and selling it dear at the same moment for a near-certain profit.

MoreLess about Arbitrage

You buy something in one place and sell it at the same moment somewhere else for a higher price, profiting from the gap.

Traders doing this help keep prices the same across markets, so the gaps are usually tiny and gone in seconds.

For example: A share trades slightly cheaper in London than in New York, so traders buy in London and sell in New York until the prices match.

Arrangement fee

A fee for setting up a mortgage deal.

In plain English:A fee some lenders charge to set up a mortgage. A deal with a big fee and a low rate can cost more than one with no fee.

MoreLess about Arrangement fee

A fee some lenders charge to set up a mortgage. You can pay it up front or add it to the loan, but then you pay interest on it too.

A deal with a big fee and a low rate can cost more than one with no fee, especially on a smaller mortgage.

For example: On a small mortgage, a deal with a £1,000 fee can cost more overall than a slightly higher rate with no fee.

Article inside Foliopeak: Fixes, Trackers, and What Overpaying Really Does

Arrears

Payments that are overdue.

In plain English:Money you should already have paid but haven't, like missed rent, mortgage or bills. It is best to talk to the lender early.

MoreLess about Arrears

Payments that are overdue on a bill or a debt, like rent, Council Tax or a mortgage.

Lenders and councils add charges and can take action if arrears build up. Talking to them early usually opens up more options.

For example: Someone misses two months of Council Tax, and the council writes asking for the whole year's bill at once.

Asset

Anything you own that is worth money.

In plain English:Something you own that is worth money, like cash, a house, a car, a pension or shares.

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Anything you own that has a money value, like cash, investments, pensions, property or a business.

What you own minus what you owe is your net worth.

For example: A person's assets might be £5,000 in savings, a £20,000 pension and their share of a house.

Asset allocation

How your investments are split between shares, bonds, property and cash.

In plain English:How you divide your money between different types of investment, like shares, bonds and cash. It has a big effect on how bumpy the ride is.

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It's how your investments are split between kinds, like shares, bonds, property and cash.

The split has a big say in how much the whole portfolio rises and falls. More in shares usually means bigger swings but more growth over time.

For example: A mix of 60% shares, 30% bonds and 10% cash.

Article inside Foliopeak: Diversification and Rebalancing, Briefly

Asset class

A family of investments that tend to behave alike, such as shares or bonds.

In plain English:A group of investments that tend to rise and fall together, like shares, bonds, property or cash.

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A group of investments that tend to behave alike, like shares, bonds, property, cash or commodities.

Mixing different asset classes is one of the simplest ways to spread risk.

For example: When shares fell sharply in a crisis, government bonds held up better, which helped people who owned both.

Article inside Foliopeak: Diversification and Rebalancing, Briefly

Asset manager

A firm that runs funds and invests money for others.

In plain English:A company that runs funds and invests money for people and pension schemes, charging a fee for it.

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A firm that runs funds and invests money for others, like BlackRock, Vanguard or Legal & General.

You usually buy its funds through a platform, and it charges a yearly fee that's included in the fund's costs.

For example: Someone buys a global tracker fund run by an asset manager through their ISA on an investment platform.

See also: Fund

ATED (Annual Tax on Enveloped Dwellings)UK

A yearly tax on expensive UK homes owned by a company.

In plain English:If a company, rather than a person, owns an expensive home in the UK, the company pays this tax every year.

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A yearly tax on a UK home worth over half a million pounds that is owned by a company, or by a partnership with a company in it. It's meant to discourage holding homes in companies to avoid stamp duty.

Homes let out as a business, and some others, can claim relief, but a return must still be sent every year.

For example: A company that owns an expensive London flat for a director to live in pays ATED on it each year.

Attachment of earnings orderUK

A court order that takes money for a debt straight from your pay.

In plain English:If you owe money and a court orders it, your employer takes some of your pay each month and sends it straight to the person you owe.

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A court order that makes an employer take regular amounts from someone's pay to repay a debt, like a CCJ, and pass them on to the person owed.

The amount depends on what you earn, and it carries on until the debt is paid.

For example: After ignoring a court judgment, someone finds a set amount taken from their wages each month to repay it.

Attendance AllowanceApplies in England, Wales, Northern IrelandEnglandWalesN. Ireland

Weekly money for older people who need help with personal care.

In plain English:Weekly money for people over State Pension age who need help with things like washing, dressing or staying safe. It isn't based on income.

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A weekly benefit for people over State Pension age who need help with personal care, like washing, dressing or staying safe, because of an illness or disability. It's £76.70 or £114.60 a week, depending on how much help you need.

It doesn't depend on your income or savings, and getting it can unlock other help, like Pension Credit.

For example: An 80-year-old who needs help getting dressed each morning could claim it, even with savings in the bank.

Figures checked 27 September 2026. Source: gov.uk (opens in a new tab)

Article inside Foliopeak: Paying for Care: The Means Test, the Home and What the NHS Pays

Attitude to risk

How much ups and downs in value you are comfortable with.

In plain English:How you'd feel if your investments dropped in value for a while. It helps decide how much to put in shares versus safer things.

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How much rise and fall in value you're prepared to put up with for the chance of a higher return.

Advisers and robo-advisers ask about it to choose a portfolio. It's worth matching it with how long you're investing for.

For example: Someone who'd panic if their investments dropped by a fifth might choose a more cautious mix with fewer shares.

Austerity

A government cutting spending to bring down its borrowing.

In plain English:When a government spends less on things like services and benefits to borrow less. It can slow the economy.

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A government cuts spending, and sometimes raises taxes, to bring down its borrowing.

The UK followed it through much of the 2010s, after the financial crisis. People argue about how much it helped or held back growth.

For example: In the 2010s, many councils had their budgets cut, so some libraries and youth centres closed.

See also: Fiscal policy

Auto-enrolmentUK

The law that makes employers put most staff into a workplace pension.

In plain English:Employers must put most workers into a pension and pay into it. You can opt out, but you'd lose your employer's money.

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Employers must put most employees into a workplace pension. At least 8% of earnings between £6,240 and £50,270 a year goes in, with at least 3% of it from the employer.

Employees can opt out, but they'd lose their employer's payments. They're put back in every few years.

For example: On a £30,000 salary, the minimum 8% on earnings above £6,240 is £1,900.80 a year, with at least 3% of those earnings paid by your employer.

Figures checked 11 November 2026. Source: gov.uk (opens in a new tab)

Article inside Foliopeak: The Employer Match, and Why It Comes FirstGame: Catch the Match

Averaging down

Buying more of something after its price falls, to lower your average cost.

In plain English:A share you own drops, so you buy more at the lower price. Your average cost falls, but you now have more riding on it.

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It's different from investing a set amount each month into a spread-out fund, which buys at many prices without picking a falling share.

A falling price can mean the company is in real trouble, so it's worth asking whether you'd buy it fresh today.

For example: Someone buys 100 shares at £10, then 100 more at £6. Their average cost is £8, so the share only needs to get back to £8 for them to break even.

Article inside Foliopeak: Trading vs Investing