Money Terms in Plain English.

V

Value trap

A share that looks cheap but is cheap for a good reason.

In plain English:A share that looks cheap, but is cheap because the business is in real trouble. It may never recover.

MoreLess about Value trap

Checking why a share is cheap helps. Falling sales or heavy debt are warning signs.

For example: A high street retailer's shares look cheap, but its sales keep falling and it goes bust.

See also: Growth and value investing

Variable-rate mortgage

Any mortgage whose interest rate can change.

In plain English:A mortgage where your interest rate can go up or down, so your monthly payments can change.

MoreLess about Variable-rate mortgage

Payments can go up or down. Some have no early repayment charges.

For example: Someone on a discounted variable rate sees their payment rise when their lender raises its standard rate.

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

VAT (Value Added Tax)UK

A tax added to the price of most goods and services.

In plain English:A tax added to the price of most things you buy. Businesses collect it and pass it to HMRC.

MoreLess about VAT (Value Added Tax)

The standard rate applies to most things, with reduced and zero rates for some. Businesses can reclaim VAT on costs.

For example: A plumber registered for VAT adds VAT to their bills and reclaims the VAT on the parts they buy.

Article inside Foliopeak: VAT: The Threshold, and Whether to Register Before You Have to

VAT Flat Rate SchemeUK

A simpler way for a small business to pay VAT.

In plain English:Small businesses pay VAT as a fixed share of their sales, instead of working out the VAT on each purchase. It can save time.

MoreLess about VAT Flat Rate Scheme

It saves time but may not save money. Check the rate for your trade.

For example: A consultant on the flat rate scheme pays a set percentage of their sales to HMRC instead of working out VAT on each cost.

Article inside Foliopeak: VAT: The Threshold, and Whether to Register Before You Have to

VAT registration thresholdUK

The level of sales at which a business must register for VAT.

In plain English:Once a business's sales go over a set amount in a year, it must register for VAT and add it to its prices.

MoreLess about VAT registration threshold

The threshold is £90,000 in any 12 months in a row.

You can register voluntarily below it. Check monthly so you don't miss it.

For example: A business whose sales over the last 12 months pass £90,000 must register for VAT.

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

Article inside Foliopeak: VAT: The Threshold, and Whether to Register Before You Have to

Vehicle Excise DutyUK

The yearly tax on most vehicles, often called road tax.

In plain English:A yearly tax on most cars and vehicles, often called road tax. The amount depends on the car's emissions and price.

MoreLess about Vehicle Excise Duty

Electric cars have paid it since April 2025.

There's an extra charge on expensive cars for the first few years. Classic cars can be exempt.

For example: Someone buys a new electric car and now pays road tax on it, which they didn't need to before April 2025.

Venture capital

Money invested in young companies that could grow fast.

In plain English:Money investors put into young companies with big growth potential, in return for a share. Many fail, but a few succeed hugely.

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Investors often take board seats. They usually invest in rounds.

For example: A venture capital firm invests £5 million in a startup for 20% of its shares.

Vesting

When shares or options promised to you become yours.

In plain English:The point when shares or options you've been promised actually become yours, often after you've stayed for a set time.

MoreLess about Vesting

Some grants vest when targets are met. Taxes may apply when shares vest.

For example: Someone's shares vest over four years with a one-year cliff, so nothing vests until their first anniversary.

Article inside Foliopeak: RSUs and Share Options: EMI, CSOP and Unapproved

VIX (the fear index)

A measure of how much US share prices are expected to swing, which jumps when markets fall.

In plain English:A number that shows how much traders expect US share prices to swing. It shoots up when markets are scared, so it's called the fear index.

MoreLess about VIX (the fear index)

It's often called the "fear index". Readings above 30 usually mean high worry.

For example: In March 2020, the VIX shot above 80 as markets crashed.

See also: Volatility

Volatility

How much and how quickly a price moves up and down.

In plain English:How much an investment's price jumps around. High volatility means bigger swings up and down.

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It's often measured by standard deviation. High volatility doesn't always mean poor returns.

For example: A fund that often moves 2% in a day is more volatile than a cash account that never moves.

Volatility decay

How up-and-down prices wear away the value of a leveraged daily fund.

In plain English:When a market goes up and down a lot, funds that double or triple daily moves lose value over time, even if the market ends up where it started.

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If an index rises 10% and then falls 10%, it is down 1%, but a 3x daily fund is down 9%.

It's worst in choppy markets. These funds are designed for short-term trading.

For example: Over a month of daily ups and downs, an index ends flat, but a 3x daily fund on it ends down 15%.

Article inside Foliopeak: How 3x Daily Funds Work

Voluntary National InsuranceUK

Paying to fill gaps in your National Insurance record.

In plain English:If you have gaps in your National Insurance record, you can pay to fill them, which may boost your State Pension.

MoreLess about Voluntary National Insurance

It's usually Class 3, at £18.40 a week.

Check your forecast before paying, as some years won't help. Class 2 can be cheaper for some self-employed people.

For example: Someone with a gap from living abroad pays for one missing year, which raises their State Pension for life.

Article inside Foliopeak: The State Pension, and Your National Insurance Record