Glossary

The UK business terms every founder eventually Googles.

From UTR to IR35 to BADR — 60+ definitions in plain English, written for people who run businesses, not for accountants.

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This glossary defines the UK startup terms founders most often need when registering, paying tax, hiring, funding and staying compliant. Each definition is written to be quotable in search snippets and AI answers.

A

Accounting reference date (ARD): The date your limited company's financial year ends. Set automatically on incorporation to the month-end of your incorporation anniversary; can be changed once per period.
Annual Investment Allowance (AIA): Lets businesses deduct 100% of qualifying capital expenditure (up to £1m/year) from taxable profit in the year of purchase.
Articles of association: The internal rulebook of a limited company. Model articles are the free default — fine for most small companies.
Auto-enrolment: The legal duty to enrol qualifying employees (over 22, earning >£10k/year) into a workplace pension. Employer must contribute at least 3% of qualifying earnings; total minimum is 8%.

B

BACS: The UK interbank payment system used for direct debits, direct credits and salary payments. Typically 3 working days to clear.
BADR— Business Asset Disposal Relief: Formerly Entrepreneurs' Relief. Reduces Capital Gains Tax to 10% on qualifying business disposals, up to a lifetime limit of £1 million. Requires 5% shareholding and 2 years as an employee or officer.
Balance sheet: A financial snapshot showing what a business owns (assets), what it owes (liabilities), and the difference (equity or net assets) at a specific date. Required in statutory accounts for limited companies.
Business rates: A property tax paid by businesses occupying non-domestic premises. Calculated by multiplying the rateable value (RV) by a government multiplier. Small Business Rate Relief can reduce or eliminate the bill for properties with RV under £15,000.

C

Class 2 NI— National Insurance — sole traders: Flat-rate National Insurance for the self-employed. From 2024/25, voluntarily payable to maintain state pension qualifying years; no longer mandatory below a threshold.
Class 4 NI: Profit-based National Insurance for the self-employed. 6% between £12,570 and £50,270, 2% above (2025/26).
Confirmation statement (CS01): Annual £34 filing at Companies House confirming who controls your company and its registered information.
Corporation Tax: Tax on company profits. 25% main rate, 19% small profits rate (under £50k), tapered between. Filed via a CT600.
Capital Gains Tax (CGT): Tax on the profit made when you sell or dispose of an asset that has increased in value. Rates for 2025/26: 18% (basic rate) or 24% (higher rate) for most assets. Business disposals may qualify for Business Asset Disposal Relief at 10%.
CIS— Construction Industry Scheme: HMRC scheme requiring contractors in the construction industry to deduct tax (20% or 30%) from subcontractor payments and pay it directly to HMRC. Subcontractors must register to receive the lower deduction rate.
Companies House: The UK's registrar of companies, responsible for incorporating and dissolving limited companies, LLPs and other entities. All limited companies must file annual accounts and a confirmation statement. The register is publicly searchable at find-and-update.company-information.service.gov.uk.

D

Director's loan account (DLA): Running record of money you, as a director, have lent to or borrowed from your company. Overdrawn DLAs over £10,000 trigger a benefit-in-kind charge.
Dividend allowance: £500 of dividend income per person per year (2025/26) that's taxed at 0%.

E

EIS— Enterprise Investment Scheme: Tax-advantaged scheme offering investors 30% income tax relief on investments up to £1 million per year in qualifying early-stage UK companies. Companies can raise up to £5 million per year. Investors must hold shares for at least 3 years.
Employment Allowance: Reduces an employer's annual National Insurance bill by up to £10,500 (2025/26). Most small businesses qualify, but companies where the sole employee is also a director do not.
EIS / SEIS: Tax-advantaged investment schemes that let investors claim income tax relief (30% EIS, 50% SEIS) for investing in early-stage UK companies.
EMI options— Enterprise Management Incentives: Tax-advantaged share options scheme for SMEs (<250 employees, <£30m assets) used to give staff equity.

F

FCA— Financial Conduct Authority: The UK's financial services regulator. Businesses providing regulated financial services (lending, insurance, investment advice) must be authorised by the FCA. Check authorisation at register.fca.org.uk.
FPS— Full Payment Submission: The RTI report submitted to HMRC on or before each payday, detailing employee pay, deductions and National Insurance contributions.
FRS 105 / FRS 102: UK accounting standards. Micro-entities (FRS 105) and small companies (FRS 102 Section 1A) get simplified disclosure.

G

GDPR— General Data Protection Regulation: UK GDPR is the UK's post-Brexit data protection law, substantially identical to the EU GDPR. It governs how businesses collect, store, use and share personal data. Most businesses must register with the ICO and publish a privacy policy.

H

HMRC: His Majesty's Revenue and Customs — the UK tax authority. Responsible for collecting income tax, Corporation Tax, VAT, PAYE, National Insurance and other taxes. Contact HMRC at gov.uk/contact-hmrc.
HSE— Health and Safety Executive: The UK's national regulator for workplace health and safety. Employers must comply with HSE regulations and report certain workplace accidents and incidents under RIDDOR. Guidance at hse.gov.uk.

I

ICO— Information Commissioner's Office: The UK's independent data protection regulator. Most businesses that process personal data must pay an annual data protection fee to the ICO (£40–£60/year). Register at ico.org.uk/registration.
Incorporation: The process of forming a limited company or LLP at Companies House. A private limited company can be incorporated online in under 24 hours for £50. The company becomes a separate legal entity from the moment of incorporation.
IR35: Off-payroll working rules that determine whether a contractor working through a limited company is genuinely self-employed or should be taxed as an employee. Small businesses (under £15m turnover, under 50 employees) are exempt from assessing IR35 status.
IPO— Intellectual Property Office: The UK government body responsible for intellectual property rights, including trademarks, patents and registered designs. Apply for a UK trademark at gov.uk/how-to-register-a-trade-mark. Not to be confused with Initial Public Offering.

L

Limited company (Ltd): A company incorporated at Companies House that is a separate legal entity from its owners. Shareholders' personal liability is limited to their investment. Must file annual accounts and a Corporation Tax return. The most common structure for businesses with significant profits or multiple owners.
LLP— Limited Liability Partnership: A business structure combining the flexibility of a partnership with the limited liability of a company. Common for professional firms (solicitors, accountants, architects). Members are taxed personally on their share of profits.

M

Making Tax Digital (MTD): HMRC's programme to require digital records and software-based filing — currently mandatory for VAT, rolling out to Income Tax for self-employed people earning over £50k from April 2026.
Memorandum of association: A short document signed by the founding shareholders of a limited company confirming they wish to form the company. Submitted to Companies House on incorporation alongside the articles of association.
MVL— Members' Voluntary Liquidation: A formal process to close a solvent limited company with significant assets. A licensed insolvency practitioner distributes assets to shareholders. Distributions are typically treated as capital gains, which may qualify for Business Asset Disposal Relief.

N

National Minimum Wage / National Living Wage: Legal minimum hourly pay rates by age. National Living Wage (aged 21+): £12.21/hr from April 2025. 18–20 rate: £10.00/hr. 16–17 and apprentice rate: £7.55/hr. Rates updated each April.

P

P45 / P46 / P60: Employment tax forms. P45 issued when leaving a job; P60 issued by your employer in April summarising annual pay and tax; P46 has been replaced by the Starter Checklist.
PAYE— Pay As You Earn: The system through which employers deduct income tax and National Insurance from salaries and pay them to HMRC.
Personal allowance: Tax-free income each person gets per year — £12,570 in 2025/26. Tapers away above £100,000 income.
PSC— People with Significant Control: Anyone owning >25% shares or voting rights in a UK limited company. Must be declared on the public Companies House register.
Profit and loss account (P&L): A financial statement showing income, costs and resulting profit or loss over a period. Also called an income statement. Required in statutory accounts for limited companies.

R

R&D tax relief: Tax relief on qualifying research and development spend. Post-2024 merged scheme replaces the SME scheme and RDEC for most claimants. Offers a 20% above-the-line credit for qualifying costs.
Registered office: The official address of a limited company, publicly listed on the Companies House register. Must be a physical UK address where legal documents can be delivered. Does not need to be where the business trades.
RTI— Real Time Information: HMRC's requirement that employers report payroll information on or before each payday via an FPS (Full Payment Submission).

S

SEIS— Seed Enterprise Investment Scheme: Tax-advantaged scheme offering investors 50% income tax relief on investments up to £200,000 per year in qualifying very early-stage UK companies. Companies can raise up to £250,000 under SEIS. Investors must hold shares for at least 3 years.
Self Assessment: The system by which self-employed people, company directors, and others with untaxed income report their income to HMRC and pay the tax due. Returns must be filed online by 31 January following the end of the tax year.
SIC code— Standard Industrial Classification: Codes identifying what a business does, picked at incorporation and updated on confirmation statements.
SME— Small and Medium-sized Enterprise: EU/UK definition: under 250 employees AND either turnover under £36m or balance sheet under £18m.
Sole trader: An unincorporated business where the owner and the business are legally the same person — full personal liability. The simplest UK business structure. Register with HMRC for Self Assessment.
Statutory Sick Pay (SSP): Minimum sick pay employers must pay (£116.75/week for up to 28 weeks in 2025/26). From April 2026, payable from day one of sickness with no lower earnings threshold.

T

Trademark: A registered sign (name, logo, slogan) that distinguishes your goods or services from others. UK trademarks are registered with the Intellectual Property Office (IPO) from £170 per class and last 10 years (renewable). Use ™ when applied for; ® only after registration.
Trading allowance: £1,000/year of self-employment income that's tax-free and doesn't need to be reported. If your gross trading income is under £1,000, you don't need to register for Self Assessment.

U

UTR— Unique Taxpayer Reference: 10-digit number HMRC uses to identify you for Self Assessment. Issued automatically after registering as self-employed or incorporating a company. Arrives by post within 10 working days.

V

VAT— Value Added Tax: Consumption tax charged on most goods and services in the UK. Standard rate 20%, reduced 5%, zero rate for some categories. Threshold for compulsory registration: £90,000 rolling 12-month turnover.

W

Working capital: The difference between current assets (cash, debtors, stock) and current liabilities (creditors, short-term debt). Positive working capital means the business can meet its short-term obligations. Negative working capital is a warning sign.
Written-down value (WDV): The value of a capital asset for tax purposes after capital allowances have been deducted. Used to calculate future capital allowances and any balancing charge or allowance when the asset is sold.

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