Glossary of HENRY finance terms

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Additional Rate: The final rate of income tax [45%] which is applied to income above £125,140.
Adjusted Income: Adjusted Income is roughly total income, PLUS personal pension contributions plus employer contributions. If your Threshold Income has reached £200,000 AND your Adjusted Income has reached £260,000, your Annual Allowance starts to taper. - https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance#work-out-your-adjusted-income
Adjusted Net Income: HMRC's calculation of your income after pension contributions and charity gifts, used to test Child Benefit eligibility and taper allowances. - https://www.gov.uk/guidance/adjusted-net-income
Annual Allowance: The maximum tax-relievable pension contribution you can make in a tax year before taper rules reduce it for higher earners. Note, exceeding your annual allowance will result in tax on the entire amount, not just the amount exceeding the allowance. - https://www.gov.uk/tax-on-your-private-pension/annual-allowance

Basic rate: The lowest rate of income tax [20%] which is applied to income above the personal allowance up to the Higher Rate limit [£12,571 to £50,270].
Benefit in Kind (BiK): A taxable perk provided by your employer that is not paid as salary, such as a company car or private medical insurance; HMRC values BiKs and charges income tax (and employer NICs) based on the benefit's cash equivalent. This may affect your Adjusted Net Income.

Capital Gains Tax: A tax on the profit when you sell (or 'dispose of') something (an 'asset') that's increased in value. It's the gain you make that’s taxed, not the amount of money you receive. The rate differs depending on if you are a basic or higher rate taxpayer.

EIS: An Enterprise Investment Scheme is a government-backed scheme to help smaller, higher-risk trading companies raise finance by offering tax reliefs to investors who purchase new shares in those companies. As an incentive to invest, investors can receive income tax relief of 30% on investments and also use them to defer capital gain tax.

High Income Child Benefit Charge: A tax charge that claws back Child Benefit when one partner's adjusted net income exceeds £50,000; the full benefit is repaid once income reaches £60,000. - https://www.gov.uk/child-benefit-tax-charge
Higher rate: A higher rate of income tax [40%] than the basic rate which is applied to income between £50,271 and £125,140.

Inheritance Tax: Tax paid on the estate (the property, money and possessions) of someone who's died. The standard Inheritance Tax rate is 40%. However, assets passed to a spouse are usually tax-free.

Parental Leave: Statutory leave that lets eligible employees take up to 18 weeks unpaid leave per child (capped at 4 weeks per year) to look after their child before age 18. - https://www.gov.uk/parental-leave/overview
Personal Allowance: The amount of income you can earn each tax year before paying income tax.
Personal Savings Allowance: Your allowances for earning interest before you have to pay tax on it. Basic rate taxpayers can earn up to £1,000 in interest tax-free, higher rate taxpayers can earn up to £500 tax-free, additional rate taxpayers do not receive a personal savings allowance.

SEIS: A Seed Enterprise Investment Scheme is a government-backed scheme to help very early-stage companies raise finance by offering tax reliefs to investors who purchase new shares in those companies.
Stepped-up basis: A capital gains rule that resets an inherited asset's cost basis to its market value at the date of death, limiting tax on past appreciation when the beneficiary later sells.

Threshold Income: Threshold Income is roughly total income, minus personal pension contributions (employer contributions do not factor in). Once this reaches £200,000 AND your Adjusted Income reaches £260,000 your Annual Allowance starts to taper. - https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance#work-out-your-threshold-income

VCT: A Venture Capital Trust is a listed investment company that backs small, higher-risk UK businesses. Investors who buy new issue shares can claim 30% income tax relief (up to £200k a year) and receive tax-free dividends if they hold for at least five years, but capital is at risk and liquidity can be limited.