EXPLANATION OF FINANCIAL TERMS
The tax statement that you
should receive from your employer on departure.
A statement from your employer
about your PAYE tax deductions. It should be handed out after the end of the tax
Term applied to companies with
a very small share price. The chances are that such shares have a high risk attached.
Their apparent speculative appeal may, or may not be justified.
A way to accumulate savings
for retirement. Premiums into a pension fund receive tax relief, capital gains
and income roll up tax free within the fund, and a proportion of the eventual
payout (when the investor reaches the age of 50 or retirement) can be taken tax
free. The remainder must be used to buy an annuity to provide income for the rest
of the investor's life. Many employers run pension schemes for their employees,
but those who are not eligible or who are self-employed can buy personal pensions
from insurance companies.
Personal equity plans. Tax
free investment used to hold shares or unit trusts. To be phased out at the end
of this tax year and replaced by Isas. Sales of Peps will end on 5 April 1999,
but existing schemes can continue.
What you can earn before paying
income tax on earned or investment income. Single people have an allowance of
£4,195 during the 1998/99 tax year. Married couples, people with dependent
children, and people aged 65 or more qualify for additional allowances.
This describes how personal
pension holders who do not wish to take their pension all at once can stagger
purchase of annuities over several years.
Permanent health insurance.
This replaces part of your income if you are unable to work because of illness
The Personal Investment Authority
(PIA) regulates about 4,000 firms, including independent financial advisers, which
advise on or market retail investment products or act for private investors in
relation to such products. It is the main regulator of firms advising on and arranging
deals in life assurance and personal pensions, friendly society investments, unit
trusts and investment trust savings schemes.
Private medical insurance.
This cover aims to meet the cost of having medical treatment performed privately.
Postal or direct accounts are
those where deposits and withdrawals are made through the post or by direct transfer
to and from a current account. They often pay better rates of interest than instant-access
accounts but withdrawals can take from three to seven days. The 60 or 90-day accounts
may also pay higher rates but normally require savers to inform their bank or
building society 60 or 90 days beforehand that they intend to make a withdrawal,
otherwise they will lose the same number of days' interest.
Shares which pay a high, fixed
dividend. If the company runs into financial problems or becomes insolvent, preference
shareholders are paid money before ordinary shareholders.
Shareholders can appoint someone
else to vote on their behalf if they can't make it to a meeting with a crucial