Money Terms in Plain English.

L

Land and Buildings Transaction Tax (LBTT)Applies in ScotlandScotland

Scotland's tax on buying property or land.

In plain English:In Scotland, this is the tax you pay when you buy a home or land, instead of stamp duty.

MoreLess about Land and Buildings Transaction Tax (LBTT)

First-time buyers pay none on the first £175,000.

It's run by Revenue Scotland, not HMRC. There's an extra charge on second homes and buy-to-let.

For example: A first-time buyer in Edinburgh buys a flat below the threshold and pays no Land and Buildings Transaction Tax.

Source: revenue.scot (opens in a new tab)

Article inside Foliopeak: Stamp Duty Land Tax

Land Transaction Tax (LTT)Applies in WalesWales

Wales's tax on buying property or land.

In plain English:In Wales, this is the tax you pay when you buy a home or land, instead of stamp duty.

MoreLess about Land Transaction Tax (LTT)

It's charged in slices of the price with its own bands. Unlike England and Scotland, it has no relief for first-time buyers.

It's run by the Welsh Revenue Authority. Higher rates apply to second homes and buy-to-let.

The bands are set by the Welsh Government and can change.

For example: Someone buys a house in Cardiff and pays Land Transaction Tax on each slice of the price over the starting threshold.

Article inside Foliopeak: Stamp Duty Land Tax

Lasting power of attorney (LPA)Applies in England, WalesEnglandWales

A legal document letting people you trust make decisions if you can't.

In plain English:You choose people you trust to make decisions about your money or health if you ever can't. It must be set up while you're still able.

MoreLess about Lasting power of attorney (LPA)

It can only be made while you can still decide for yourself. Registration takes weeks and has a fee.

You can choose more than one attorney and say how they make decisions. Scotland and Northern Ireland have their own versions.

For example: A woman sets up a lasting power of attorney for money. Years later, when she has dementia, her son uses it to pay her bills.

Article inside Foliopeak: Wills and Lasting Powers of Attorney: Who Inherits, and Who Acts for You

Late filing penaltyUK

A fine for sending your tax return late.

In plain English:If you send your tax return late, HMRC charges a fine, even if you owe no tax. It grows the longer you leave it.

MoreLess about Late filing penalty

It's £100 at once, even if no tax is owed, then more the longer it's late.

Extra penalties come after three, six and twelve months. Appealing is possible if you have a good reason, such as serious illness.

Filing on time even if you can't pay avoids this penalty.

For example: Someone sends their return a week after the deadline, owing no tax at all, and still gets a £100 fine.

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

Layer 2 (crypto)

A network built on top of a blockchain to make transactions faster and cheaper.

In plain English:An extra network built on top of a blockchain, like Ethereum, so payments can be faster and cheaper.

MoreLess about Layer 2 (crypto)

Examples include networks that bundle many transactions together. Moving coins between networks uses "bridges", which have been hacked.

Fees are usually much lower than on the main chain.

For example: Someone uses a layer 2 network to send a small amount of ether for a fraction of a penny, instead of a much higher fee on Ethereum.

Article inside Foliopeak: Cryptocurrency

Lease extension

Paying to add years to the lease on a leasehold home.

In plain English:Paying the freeholder to add more years to your lease. A short lease makes a home harder to sell or get a mortgage on.

MoreLess about Lease extension

Leases under 80 years cost more to extend.

Legal and valuation costs add to the price. Leaseholders who've owned for two years have a legal right to extend.

New laws are making it cheaper and simpler.

For example: Someone with 78 years left on their lease extends it by 90 years before selling.

Leasehold reformUK

Changes to the law to make owning a leasehold home fairer, arriving in stages.

In plain English:New laws are changing leasehold to make it cheaper and easier to extend a lease or buy the freehold. They're coming in bit by bit.

MoreLess about Leasehold reform

It started with a 2024 Act, and is arriving in stages.

Not all of it is in force yet. Some changes need more rules first.

Leaseholders can check government guidance for what applies now.

For example: Once in force, a leaseholder will be able to extend their lease to 990 years rather than 90.

See also: Freehold and leasehold

Legacy (bequest)

A gift left to someone in a will.

In plain English:Money or a particular thing you leave to someone in your will.

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A specific legacy is a named item or sum. A residuary legacy is a share of what's left after debts and other gifts.

Legacies to charity can lower Inheritance Tax.

For example: A will leaves £5,000 to a niece, a watch to a grandson and the rest to the children.

Lender of last resort

A central bank lending to banks in a crisis when no one else will.

In plain English:In a crisis, when banks can't borrow from anyone else, the central bank lends to them to stop the system collapsing.

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It charges interest and wants good security. It's meant to stop panic spreading from one bank to others.

In 2007 and 2008 the Bank of England did this for several banks.

For example: When Northern Rock ran short of cash in 2007, the Bank of England lent it money to keep it going.

See also: Bank of England

Let to buy

Renting out your current home and buying a new one to live in.

In plain English:You rent out your current home and use a new mortgage to buy a different home to live in.

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You'll need your lender's permission to let your home. Rental income is taxed.

It can be a way to keep a home you might want back, but brings landlord duties.

For example: A couple moving cities keeps their flat and lets it out, buying a new home with a new mortgage.

Letter of wishes

A note to go with your will saying what you'd like done.

In plain English:A private note with your will that explains what you'd like done, like who should get small keepsakes. It isn't legally binding.

MoreLess about Letter of wishes

It can explain things like who should get personal items or how to care for children. It's easy to update.

Trustees and executors usually follow it, but don't have to.

For example: Someone writes a letter of wishes saying their jewellery should go to particular nieces and how they'd like their ashes scattered.

Article inside Foliopeak: Wills and Lasting Powers of Attorney: Who Inherits, and Who Acts for You

Lettings reliefUK

A tax relief on selling a home you lived in and let out, now only when you shared it with the tenant.

In plain English:A tax relief when you sell a home you once lived in and also rented out. It now only applies if you lived there with your tenant.

MoreLess about Lettings relief

Since April 2020 it only applies if you lived there at the same time as your tenant.

It used to be more generous, covering any home you once lived in. Private residence relief may also apply for years you lived there.

For example: Someone lived in their home while letting a room to a lodger, then sold it. Lettings relief cuts the gain on the let part.

Article inside Foliopeak: Letting Out Property: Section 24 and What You Can Deduct

Level and escalating annuities

Annuities that pay the same each year, or that rise each year.

In plain English:A level annuity pays the same amount every year. An escalating one starts lower but rises each year to help with rising prices.

MoreLess about Level and escalating annuities

An escalating annuity can take many years to pay more in total than a level one.

Inflation-linked ones protect against rising prices but start much lower.

For example: A level annuity pays £5,000 a year for life. An escalating one starts at £3,500 but rises 3% a year.

Leverage

Borrowing to invest, which makes both gains and losses bigger.

In plain English:Borrowing money to invest more than you have. If prices rise, your gain is bigger. If they fall, your loss is bigger too, sometimes more than you put in.

MoreLess about Leverage

In trading, leverage is shown as a ratio, such as 5:1. Losses can be bigger than what you put in.

Companies use leverage too, by borrowing.

For example: Someone buys a £200,000 home with a £20,000 deposit. A 10% rise in its value doubles their equity.

Article inside Foliopeak: Leverage - Borrowing to Invest

Leveraged buyout (LBO)

Buying a company mostly with borrowed money that the company then has to pay back.

In plain English:Buying a company mainly with borrowed money, then using the company's own profits to pay back the loan.

MoreLess about Leveraged buyout (LBO)

The company's profits pay the interest. If profits fall, the debt can sink it.

Some well-known UK companies have been bought this way.

For example: A private equity firm buys a chain of shops for £1 billion, borrowing £700 million that the chain must repay.

See also: Private equity

Liability

Something you owe, such as a mortgage or loan.

In plain English:Something you owe, like a mortgage, loan, credit card balance or unpaid bill.

MoreLess about Liability

Liabilities can be short term, due within a year, or long term, like a mortgage. Businesses show them on their balance sheet.

Some liabilities are less obvious, like a tax bill coming up.

For example: Someone with a £150,000 mortgage, a £5,000 car loan and a £1,000 card balance has £156,000 of liabilities.

Life insurance

Insurance that pays out if you die while the policy is running.

In plain English:You pay a monthly amount, and if you die while covered, it pays your family money. It's most useful if people depend on your income.

MoreLess about Life insurance

Writing it in trust can keep the payout out of your estate and speed up payment. You can have joint or single policies.

Smoking and health affect the price.

For example: A couple takes out a 25-year term policy, so if one dies, the payout clears the mortgage.

Article inside Foliopeak: Life Insurance and Income Protection: The Gap Most Families Have

Life interest trust

A trust that lets one person use money or a home for life, then passes it on.

In plain English:A trust that lets someone, often a second husband or wife, live in a home or get its income for life. After they die, it passes to others, like children.

MoreLess about Life interest trust

It's often used in wills to protect children's inheritance if a partner remarries. Trustees manage it.

For Inheritance Tax it's usually treated as part of the life tenant's estate.

For example: A man leaves his half of the house in a life interest trust, so his wife can live there for life and it then passes to his children.

Article inside Foliopeak: Trusts in Plain English

Lifestyle creep

When your spending rises every time your pay does, so you never save more.

In plain English:When you get a pay rise and your spending goes up just as much, so you never manage to save more.

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It's natural, but can stop people reaching goals. Bigger homes and cars bring higher running costs too.

Raising pension payments with each pay rise is an easy way to save without noticing.

For example: Someone gets a £5,000 pay rise and puts half towards their pension, so their spending doesn't rise by the full amount.

Article inside Foliopeak: Why Good Plans Get Abandoned

Lifestyling

Moving pension savings into safer investments as retirement gets closer.

In plain English:As you get near retirement, your pension moves your money into safer investments bit by bit, so a market fall doesn't hit you just before you need it.

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It aims to lower the risk of a big fall just before retirement. It was designed for people buying an annuity.

If you plan to keep your pot invested, it may move too much into safer assets.

For example: Ten years before their retirement date, someone's pension starts moving from shares into bonds and cash each year.

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

Lifetime allowanceUK

An old cap on how much you could save in pensions, now scrapped.

In plain English:There used to be a limit on how much you could build up in pensions over your life without extra tax. It has been scrapped.

MoreLess about Lifetime allowance

It was abolished in April 2024.

Some people still have protections from the old system that give them a higher tax-free lump sum.

Old letters or forms may still mention it.

For example: Someone with a protection certificate from the lifetime allowance days can take a bigger tax-free lump sum.

Article inside Foliopeak: The 25% Tax-Free Lump Sum, and the Allowances That Replaced the Lifetime Allowance

Lifetime ISA (LISA)UK

An ISA for a first home or retirement, with a government bonus.

In plain English:An ISA for people under forty to save for a first home or for later life. The government adds a bonus, but there's a charge if you take money out for anything else.

MoreLess about Lifetime ISA (LISA)

The first payment must be made before 40, and you can pay in until 50: up to £4,000 a year, inside the ISA allowance, with a 25% government bonus. Taking money out for anything but a first home, after 60 or on terminal illness costs 25% of what is withdrawn, or 20% for a first home over £450,000. From April 2029, new savers get a First Time Buyer ISA in place of the Lifetime ISA: up to £4,000 a year, with a 25% government bonus when the money goes on a first home of up to £450,000, and no upper age limit. The bonus is capped at £20,000 in total. Until then a Lifetime ISA can still be opened, and existing ones can be paid into under the current rules.

It can be held alongside other ISAs. The bonus is paid monthly.

For example: Pay in £4,000 in a tax year and the government adds £1,000.

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

Article inside Foliopeak: The Lifetime ISA Bonus

Lifetime mortgage

A loan against your home that is repaid when you die or move into care.

In plain English:A loan for older homeowners against their home. You usually make no payments, and interest builds up until it's paid back when the home is sold.

MoreLess about Lifetime mortgage

You can usually make some repayments to reduce interest. Some plans let you take money as needed.

Early repayment charges can be large.

For example: A couple in their 70s takes a lifetime mortgage to help their children, keeping the right to live in their home.

Limited company

A business that is legally separate from the people who own it.

In plain English:A business that's a separate legal person from its owners. If it fails, the owners usually only lose what they put in.

MoreLess about Limited company

Its accounts and directors' names are public at Companies House. Directors have legal duties.

Lenders often ask directors for personal guarantees, which can make them personally liable.

For example: A business owner sets up a limited company. When it fails, the owner loses what they put in but not their own house.

Article inside Foliopeak: Sole Trader or Limited Company: The Real Trade-Off

Limited company buy-to-letUK

Owning rental homes through a company, which is taxed differently from owning them yourself.

In plain English:Owning rental homes through a company rather than in your own name. The company pays Corporation Tax, and can take off all its mortgage interest.

MoreLess about Limited company buy-to-let

Mortgage rates for companies can be higher. Advice helps work out if it's better for you.

Income can be kept in the company and taken out later.

For example: A higher rate taxpayer buys new rental homes through a company, so all the mortgage interest can be taken off its profits.

See also: Section 24

Liquidation

Closing a company and selling what it owns to pay its debts.

In plain English:When a company is closed down and everything it owns is sold to pay back what it owes.

MoreLess about Liquidation

Debts are paid in order: secured lenders, staff, then others. Shareholders get what's left, often nothing.

Directors' conduct is checked when a company that can't pay its debts closes.

For example: A shop that can't pay its debts goes into liquidation. Its stock is sold and lenders get part of what they're owed.

Liquidity

How quickly something can be turned into cash.

In plain English:How fast and easily you can turn something into cash without losing value. Cash is very liquid; a house isn't.

MoreLess about Liquidity

Having enough liquid money helps in an emergency. Markets can become less liquid in a crisis.

Some funds hold hard-to-sell things but let you sell daily, which can cause problems.

For example: Someone needs £5,000 quickly. Cash in an easy access account is ready today, but selling a rental property would take months.

Article inside Foliopeak: What Pensions and Property Mean in Your Net WorthGame: Runway

Liquidity pool

A pot of crypto coins locked in a smart contract so people can swap between them.

In plain English:A pot of two or more crypto coins locked in computer code, which people use to swap between them. Those who add coins earn fees but take risks.

MoreLess about Liquidity pool

The loss from prices moving apart is called impermanent loss. Pools can also be hacked.

Fees and rewards can look high, but the risks are high too.

For example: Someone adds ether and a stablecoin to a pool. Ether's price doubles, and they end up with less than if they'd just held the coins.

Article inside Foliopeak: Cryptocurrency

Liquidity risk

The chance that you can't sell an investment quickly without a big price cut.

In plain English:The risk that you can't sell something quickly when you need the money, or can only sell it for much less than it's worth.

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Property funds have had to stop withdrawals at times, such as after the 2016 vote to leave the EU.

Keeping some money in cash helps avoid having to sell at a bad time.

For example: Someone needs money from a property fund, but it's stopped withdrawals for several months.

Article inside Foliopeak: Alternative & Other Investments

Loan shark

An illegal moneylender.

In plain English:Someone who lends money illegally, often charging huge interest and using threats. If you've borrowed from one, you can get free help.

MoreLess about Loan shark

They often start friendly, then raise the debt and use threats. Some take bank cards or ID as security.

You don't have to pay back an illegal loan, and reporting is confidential.

For example: Someone borrows £200 from a neighbour who later demands £1,000 and threatens them. They contact the Illegal Money Lending Team.

Loan to income (LTI)

How big a mortgage is compared with your income.

In plain English:How much you borrow on a mortgage compared with what you earn. Lenders limit how many times your income they'll lend.

MoreLess about Loan to income (LTI)

Most lenders lend up to about four and a half times income, some more for higher earners. Your outgoings matter too.

For example: Earn £50,000 and borrow £225,000, and you've borrowed four and a half times your income.

Loan to value (LTV)

How big a mortgage is compared with the home's value.

In plain English:How much you borrow compared with what the home is worth. A lower share, from a bigger deposit, usually gets a better rate.

MoreLess about Loan to value (LTV)

Rates usually drop at set steps, such as 60%, 75% and 90%. As you pay down the mortgage and prices rise, it falls.

For example: Borrow £180,000 on a £200,000 home and the loan to value is 90%.

Article inside Foliopeak: Buying a Home: From Offer to Keys

Local Housing Allowance (LHA)UK

The most help with rent a private tenant on benefits can get.

In plain English:A limit on how much help with rent you can get on benefits if you rent privately. It depends on where you live and how many bedrooms you need.

MoreLess about Local Housing Allowance (LHA)

It's based on rents in your area. Single people under 35 usually get the rate for a room in a shared house.

It can be frozen for years, so it may not keep up with rents.

For example: A family's rent is £100 a month more than the local housing allowance for their area, so they pay the gap themselves.

Lock-up period (IPO)

A set time after a listing when insiders aren't allowed to sell their shares.

In plain English:After a company first lists its shares, its founders and early investors usually can't sell for a set time, often several months.

MoreLess about Lock-up period (IPO)

It's usually several months. It's meant to stop insiders selling straight away.

Investors often watch for the end date.

For example: Six months after a company lists, its lock-up ends and early investors sell, pushing the price down.

See also: IPO (initial public offering)

Logbook loan

An expensive loan secured on your car.

In plain English:A loan where you hand over your car's logbook as security. It's very expensive, and the lender can take your car if you fall behind.

MoreLess about Logbook loan

The lender holds a bill of sale, so you don't legally own the vehicle until it's repaid. It can be taken without a court order.

Other loans are usually cheaper and safer.

For example: Someone borrows £1,000 against their car and misses a few payments. The lender takes the car.

London Stock Exchange (LSE)UK

The UK's main stock exchange.

In plain English:The main place in the UK where shares in companies are bought and sold.

MoreLess about London Stock Exchange (LSE)

It's one of the oldest exchanges in the world. Companies list to raise money and let investors trade their shares.

It's open on weekdays during set hours.

For example: A UK company lists its shares on the London Stock Exchange so investors can buy and sell them.

Article inside Foliopeak: Stocks, Shares and Equities

Long-Term Asset Fund (LTAF)UK

A fund built to hold investments that are slow to buy and sell.

In plain English:A fund that invests in things that take time to sell, like property or private companies, so you can't always get your money out quickly.

MoreLess about Long-Term Asset Fund (LTAF)

It's often called an LTAF. It's mainly for pensions and wealthy investors.

It may help pensions invest in UK companies and projects.

For example: A workplace pension puts a small part of its default fund into an LTAF holding wind farms and private companies.

Loss aversion

Feeling a loss more strongly than a gain of the same size.

In plain English:Losing money feels about twice as bad as gaining the same amount feels good. It can make people hold on to bad investments or avoid sensible risks.

MoreLess about Loss aversion

Studies suggest a loss feels about twice as bad as a same-sized gain feels good.

Setting rules in advance, such as when to sell, can help.

For example: Someone won't sell a falling share because they'd have to admit a loss, and it falls further.

See also: FOMO (fear of missing out)

Loss reliefUK

Using a business loss to cut your tax.

In plain English:If your business makes a loss, you can use it to reduce tax on other income or on profits in other years.

MoreLess about Loss relief

Losses from property letting can usually only be set against future property profits.

Claims have time limits.

For example: A sole trader makes a £10,000 loss in their first year and sets it against salary from a part-time job, getting a tax refund.

Low-coupon giltUK

A government loan paying little interest, which can be tax-efficient.

In plain English:A government loan that pays very little interest, so most of your return comes from a gain, which on gilts is free of Capital Gains Tax.

MoreLess about Low-coupon gilt

Their price is often well below £100. The small coupon is still taxed as income.

They're popular with people who pay higher rate tax and have used their ISA allowance.

For example: Someone buys a gilt at £90 that pays very little interest and repays £100 in three years. The £10 rise is free of Capital Gains Tax.

Lower Earnings Limit (LEL)UK

The pay level from which a job counts towards your State Pension.

In plain English:If you earn at least this much in a job, that year counts towards your State Pension, even before you start paying National Insurance.

MoreLess about Lower Earnings Limit (LEL)

It's £129 a week.

Earnings between it and the threshold where National Insurance starts are counted as paid, with no deductions.

Having several small jobs, each below it, can leave gaps in your record.

For example: Someone works a part-time job earning just above the lower earnings limit. They pay no National Insurance but still build State Pension.

Article inside Foliopeak: Maternity, Paternity and Shared Parental Pay: What You Get, and What a Year of Leave Changes

Lump sum allowanceUK

The most you can take tax-free from your pensions over your life.

In plain English:The most tax-free cash you can take from all your pensions over your lifetime. Anything above it is taxed as income.

MoreLess about Lump sum allowance

It's usually a quarter of each pot, up to £268,275 in all.

Some people with old protections have a higher limit. Small pots can sometimes be taken in other ways.

For example: However many pensions you have, the tax-free cash you can take over your life is capped at £268,275 for most people.

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

Article inside Foliopeak: The 25% Tax-Free Lump Sum, and the Allowances That Replaced the Lifetime Allowance

Lump sum and death benefit allowanceUK

A cap on tax-free pension lump sums in life and on death together.

In plain English:A limit on the total tax-free lump sums that can be paid from your pensions, whether you take them or they're paid to others when you die.

MoreLess about Lump sum and death benefit allowance

The cap is £1,073,100.

Payments above it are taxed. Some people with old protections have a higher limit.

For example: When someone dies, their lump sums taken in life plus the lump sum paid to their family are added up and checked against this allowance.

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

Article inside Foliopeak: The 25% Tax-Free Lump Sum, and the Allowances That Replaced the Lifetime Allowance