Money Terms in Plain English.

K

K tax codeUK

A tax code that adds to your taxable pay because your perks are worth more than your allowance.

In plain English:If your perks or unpaid tax add up to more than your tax-free amount, a K code adds to your taxable pay so the right tax is taken.

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It's often used when a company car or medical insurance is worth more than your allowance. The half limit stops all your pay going in tax.

Checking your code in the HMRC app helps spot mistakes.

For example: Someone has a K code because their company car benefit is larger than their Personal Allowance, so a little extra is added to their taxable pay.

Article inside Foliopeak: Your Tax Code and Your Payslip

Key Facts Illustration (ESIS)UK

The standard summary of a mortgage's rate, fees and total cost, laid out the same by every lender.

In plain English:A standard document every lender gives you, showing a mortgage's rate, fees and total cost, so you can compare them easily.

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It's also known as an ESIS. Lenders must give it before you apply in full.

Check the total amount to repay, not just the monthly cost.

For example: Someone compares two lenders' ESIS documents side by side and sees one has much higher fees overall.

Key person insurance

Insurance a business takes out on someone it can't easily do without.

In plain English:Insurance that pays a business if someone vital to it, like the founder, dies or falls seriously ill.

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The business pays the premium and gets the money. It can help cover lost profits or the cost of finding someone new.

Tax rules on premiums depend on the type of policy.

For example: A small software company insures its lead developer. When they fall seriously ill, the payout helps the business hire a replacement.

KID (key information document)

A short standard document showing an investment's costs and risk score.

In plain English:A short document that tells you an investment's costs, risks and possible returns, in the same format for every product.

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It gives a risk score from 1 to 7. The UK is replacing it with new documents of its own.

KID stands for key information document. The risk score is based mainly on past price swings, so it can be misleading.

Cost figures are shown as examples over set periods.

For example: Someone reads a fund's KID to check its risk score and yearly charges before buying.

KYC (Know Your Customer)

The ID checks a financial firm must do before you open an account.

In plain English:Short for know your customer. Banks and money firms must check your identity before you open an account, to stop fraud and money laundering.

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KYC stands for know your customer. Firms may also check where your money came from.

Checks are usually quick, often using a phone camera.

For example: Someone opens an investment account and is asked to upload their passport and a recent bank statement.