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Last Reviewed: September 2024
Use this glossary to understand the meaning of different tax terminology.
| Authorising your agent form 64-8 | This form allows our team to talk to HMRC on your behalf. Without this form they will not speak to us, this is to protect you from fraud. Not having this form from you is the biggest single cause of delay with people receiving their refund cheque. If you need a new copy of the form you can download it from the site or get in touch and we can post you one out. |
| Agent | A company or person you have appointed to deal with HMRC on your behalf. For us to be your agent we need you sign and return 2 copies of the HMRC form called Authorising your agent. |
| AMAP: Approved Mileage Allowance Payments | Approved Mileage Allowance Payments - the maximum amount you can claim for business travel under HMRC rules. If your employer does pay the full amount or does not reimburse you at all for work related travel you may be able to claim a tax refund. |
| At Source | When tax is taken out of your income before you are paid. This usually applies to PAYE (employed) or Self Employed people who work under CIS (the Construction Industry Scheme). |
| Bankruptcy | A legal status imposed by a court if you can’t repay your debts. |
| Basic Rate Tax | This is currently 20% and is the amount deducted from your salary after you have earned over the Personal Allowance. Read more about allowances and tax codes. |
| Benefits | Your employer may provide you with certain benefits e.g. medical cover, car allowance, interest-free loans and job expenses, which will affect your Personal Allowance. |
| Expenses | If you are employed (PAYE) these could include travel expenses, meals or lodging. Self-employed people can claim for all expenses caused by their job. |
| CIS (Construction Industry Scheme) | The Construction Industry Scheme sets out how self-employed workers are paid by contractors. Tax is normally deducted by the contractor you work for and paid to HMRC on your behalf, usually at 20%. |
| CIS Card | Card showing details of your registration in the Construction Industry Scheme. The CSCS card is a different card and shows your skills and qualifications. |
| National Insurance |
You pay National Insurance contributions to qualify for certain benefits including the state pension. You need a National Insurance number before you can start paying National Insurance contributions. There are different types of National Insurance (known as ‘classes’). The type you pay depends on your employment status and how much you earn, and whether you have any gaps in your National Insurance record. If you’re employed, you stop paying Class 1 National Insurance when you reach the state pension age. If you’re self-employed you stop paying:
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| Coding Notice | A letter from HMRC telling you about a change in your tax code. If you're a RIFT customer making sure your tax code is correct (so you don't over or under pay your tax) is all part of our inclusive aftercare service. |
| Enquiry |
HMRC sometimes ask questions to check you are entitled to your tax refund. We will deal with this on your behalf under the RIFT Guarantee. It can be worrying if you get a letter about an HMRC enquiry, but just get in touch with us and we will get it all sorted out for you. Read more about why you may get selected for an enquiry and what to do. |
| FRE: Flat Rate Expenses |
Flat rate expenses, are a kind of tax relief for employees based on your work-related expenses. They are called “flat rate" expenses because you claim a flat rate of tax relief set by the government instead of the individual costs. The Flat Rate Expenses scheme makes it easy to claim tax relief if you’ve had to use your own money for travel, clothing, tools or other things that you must buy for your job. |
| ESA | Employment Support Allowance: a state benefit paid if you are unable to work, usually due to illness. |
| Gross Income | The amount you earn before any deductions (e.g. tax, National Insurance) are made. |
| HMRC | Her Majesty's Revenue and Customs - the government department that deals with tax. |
| Higher Rate Tax |
The top income tax band, currently 40%. How much income tax you pay in each tax year depends on:
Tax bands and allowances (and any tax relief associated with them) can be changed by the government and depend on your status, so don't assume you will pay the same tax every year if your income does not change. You can see the income tax bands and personal allowances for the current tax year on the government website |
| JSA | Jobseeker's Allowance: A state benefit paid by the Department of Work and Pensions if you are unemployed, but available for and actively seeking work. |
| Net Income | The income you receive after any deductions (e.g. tax, National Insurance) are made. |
| NI No. or National Insurance Number | Your national insurance number makes sure your National Insurance contributions and tax are recorded against your name. |
| P11D | HMRC form, also called an Expenses and Benefits form, that lists any taxable benefits you receive from your employer e.g. medical cover, company vehicle. You’d receive this from your employer. |
| P45 | HMRC form that your employer gives you when you leave employment stating how much you have earned and how much tax you have paid in the current tax year. Read our P45 guide here. |
| P60 | HMRC form, also called an End of Year Certificate, that shows your total earnings and tax paid in one tax year. You should receive one of these forms from your employer every year. Read about P60's here. |
| P800 | A P800 tax calculation is the form HMRC uses to tell you you've either paid too much tax or not enough. |
| BR | If you've got a BR tax code, it means you're being taxed at the basic rate of income tax (20%) on all of your income from this job, without the benefit of a tax-free personal allowance. |
| D0 | A D0 tax code means you're being taxed at the higher rate of income tax (40%) on all of your income from this job, without the benefit of a tax-free Personal Allowance. |
| PAYE | Stands for Pay As You Earn. It’s the normal tax scheme for employees where your employer deducts tax and National Insurance from your wages before paying you. |
| Personal Allowance | The amount you can earn each year without paying tax. |
| SA1 |
This form allows us to apply for your Unique Taxpayer Reference (UTR) number. An SA1 form is a document that registers a person for self assessment tax returns. It's used by people who aren't self-employed, but need to register for other reasons. Read more about the SA1 form and registering for self assessment. |
| SA302/ Tax Calc | A letter from HMRC letting you know if you have overpaid or underpaid tax. |
| Self-Assessment | Self Assessment is a system HMRC uses to collect Income Tax in the UK. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a self assessment tax return. |
| Self-Assessment record | Details of any tax returns you’ve filled in, or which have been completed on your behalf, held by HMRC. |
| Self-Assessment Tax Return |
A self assessment tax return is how people report certain types of income to HRMC so that they can work out the tax due. A common misconception is that it is just for self employed people. Even you are employed and paying tax at source (PAYE) there are other circumstances under which you may need to file a self assessment tax return. Failing to do means a hefty fine from HMRC and they do not accept "not knowing you had to do it" as a valid excuse. Who needs to file a self assessment tax return? Penalties for failing to file self assessment |
| Self-Employed |
If you start working for yourself, you’re classed as a sole trader (self employed) - even if you haven’t yet told HMRC. You must register and follow the rules for self-employed tax and National Insurance Sole traders and partners are classed as self-employed by HM Revenue and Customs (HMRC). This includes selling goods or services (‘trading’), unless you’re just selling a few unwanted items occasionally. If you are self employed you will need to register and complete a self assessment tax return. |
| Subcontractor |
Someone who does construction work for a contractor (but is not an employee of the contractor). Being classified as a subcontractor in the Construction Industry Scheme (CIS) means you'll have tax deducted from your earnings. |
| Tax refund | A tax refund or tax rebate is the money that you get back from HRMC if you paid too much in tax. By law, if you're travelling to temporary workplaces and paying to make your own way there, you could get a tax refund. On average, a 4-year tax refund claimed through RIFT amounts to £3,000. |
| Tax year |
The tax year starts on 6th April every year and ends on 5th April the following year. See our calendar of important deadlines for individuals and businesses. |
| UTR |
A UTR (Unique Taxpayer Reference) number is a 10 digit number that is unique to either you or your company. It identifies you personally with HMRC for all things related to your personal tax obligations. |
| WRA | Working Rule Agreement - this is the largest industrial agreement with the construction industry and sets out minimum pay rates, travel expenses and death and accident benefits. |
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