| de minimis | A lower limit below which you need not do something. For example, if you have given your children money and they receive interest on that money, you do not need to include that income on your Tax Return if it is less than a de minimis limit of £100. |
| death benefits | Benefits paid to a beneficiary upon the death of a person. These benefits can include payouts from a pension scheme or life insurance policy. |
| debt collection | The means of chasing payment of an outstanding liability. If you have an outstanding debt and employ a professional debt collector, the costs of employing such a service are an allowable tax deduction. |
| debtors | People who owe you money. You need to include in your business accounts any sales that you have made even if you have not collected the money for them. If you have a balance sheet, debtors will appear as an asset of your business. |
| deduction | Something which reduces the amount of your taxable income or your chargeable gains. A business expense, such as the purchase of stationery supplies, is a deduction that can be used to reduce the amount of your taxable business profits. Indexation allowance (to April 1998) is a deduction that can be made in the calculation of your chargeable gain on the disposal of an asset. |
| deed of covenants | Regular annual payments paid using funds from your taxable income under a legally binding agreement. Most commonly used for regular payments to charities, but may also be used for certain payments in connection with your business, such as payments to retiring partners. |
| deferment | You can apply to the DSS (Department of Social Security) to defer payment of national insurance contributions if it is likely that you would otherwise pay more than the permitted maximum, or if some of your business income is liable to Class 1 employees national insurance contributions. Any remaining liability is collected by the DSS after the end of the tax year. |
| deficiency relief | Tax relief given on the maturity, surrender or sale of a life insurance policy, if the excess of the total receipts from the policy over the total premiums paid is less than the amounts that have already been taxed on partial surrenders and withdrawals in earlier tax years. The relief cannot exceed the amounts which have already been taxed. |
| Department of Social Security | The Department of Social Security (DSS) oversees the Benefits Agency (which deals with the payment of state benefits), and until 6 April 1999 was responsible for overseeing the Contributions Agency (which dealt with the collection and recording of national insurance contributions). |
| dependent child | Any child under 16, or a child aged 16 or over who is in full time education or who needs full time care. |
| deposit | Sum of money which is placed with a deposit taker (a bank for example), usually in exchange for interest on the money deposited. |
| deposit takers | Bank of England approved organisations that can accept deposits - generally banks, building societies and so on. |
| depreciation | A deduction from business profits made to write off the cost of capital assets over their expected useful lives. Depreciation is not an allowable expense for tax purposes, but assets are given an equivalent tax deduction through capital allowances. |
| director | Someone who is appointed to a position high up in a private or public company and "directs" how the business is run. |
| directors' fees | Fees paid by a company to its directors. May be paid in addition to salary and other benefits. |
| disallowable expenses | Expenses which, although charged in your business accounts, are not tax deductible. The disallowable expenses must be added on to your trading profits when you calculate your taxable profits, and hence tax liability. |
| discounted securities | Certain redeemable securities that were issued at a price lower than the amount that will be paid when the securities are redeemed. The securities must have been issued after 13 March 1984 at a discount exceeding 15% of the redemption value, or 1/2% of the redemption value for each year between issue and redemption. does not include ordinary shares and index-linked securities. |
| discretionary trusts | Trusts where the trustees can choose how to allocate the income and/or capital between the beneficiaries. They may also have the power to accumulate income rather than paying it out to beneficiaries every year. The trustees' powers are specified by the trust deed. |
| dispensation | An agreement between an employer and the Inland Revenue that particular expenses paid to employees are genuine business expenses. The expenses are not reported on the forms P11D or P9D and must not be included on the employees' own Tax Returns. |
| disposals | Term used for the sale, gift, loss or exchange of an asset or part of an asset. |
| distribution | In general terms, money which is paid by a company or unit trust manager to a shareholder or unit holder. The distribution may be in the form of an asset rather than in cash. The payment is made out of accumulated profits. |
| dividend | Money which is paid by a company or unit trust manager to a shareholder or unit holder. The payment is made out of accumulated profits. |
| dividend distributions | Open ended investment companies (£ICs) and unit trust managers make dividend distributions to shareholders from the dividends that they have received from their underlying investments. |
| dividend rate tax | For 1999/2000 the rate of notional tax suffered on UK dividends is 10%. An income tax credit equal to the 10% notional tax (rounded to the nearest penny) attaches to the dividend, and the amount of tax credit is advised to you on each dividend voucher. For income tax purposes your dividends are valued at 10/9 of the amount actually received, which amounts to adding back the tax credit on each voucher. The amount thus obtained is the "grossed-up dividend". Your final liability to tax (on the grossed-up dividend) is - 10% on dividend income falling within the lower or basic rate income bands (i.e. up to total taxable income of £28,000), and - 32.5% on dividend income falling within the higher rate band. The 10% tax credit is treated as meeting the basic rate liability. From 6 April 1999, the notional tax credit on dividends is not repayable to individuals in any circumstances, even if they have no actual liability to tax on their dividend income (for instance because they have large personal allowances or losses which absorb all income). The 10% dividend tax credit is however repayable to PEP managers, who can reclaim the 10% notional tax on dividends received within the PEP. If you are a starting or basic rate taxpayer, you have no further tax liability on your dividends for 1999/2000 as the tax credit meets your liability in full. However you should still report all the dividend received on your tax return, in order to be sure that your total income does not in fact exceed the threshold for higher rate tax. If your total taxable income including grossed-up dividends exceeds £28,000, the dividends are deemed to be the top part of your total income. Therefore the 32.5% tax rate will apply to the part of your income exceeding £28,000 and represented by the dividends. This special higher rate of 32.5% (on the grossed-up dividend) equates to further tax amounting to one-fifth (20%) of the actual (net) dividend received." |
| dividends - cum-dividend | If you sell a share just before the date you become entitled to a dividend, the share is sold cum-dividend. The purchaser of the share(s) then receives the dividend. |
| dividends - ex-dividend | If you sell a share just after the date you become entitled to a dividend, but before the date the dividend is paid out, the share is sold ex-dividend. You are still entitled to receive the dividend. |
| dividends - stock or scrip dividends | A dividend which you have elected to receive in shares instead of cash. |
| dividends and other qualifying distributions from UK companies | In general terms, this is a dividend which is paid to a shareholder in the form of an asset (shares or property owned by the company for example) or cash. The payment is taken out of accumulated profits and the tax credit deducted by the company is repayable (in certain situations). |
| DOM 1 | An Inland Revenue questionnaire that helps determine your domicile (the country where you intend your permanent home to be). |
| domicile | Your domicile is the country where you intend your permanent home to be. This can be different from the country you currently live in. The rules for determining where you are domiciled can be complicated and if you live in the UK but think you may be domiciled elsewhere you should consult a Tax Adviser. |
| domicile of choice | The country you have chosen as your permanent home but which is different from your domicile of origin or dependency. |
| domicile of dependency | Applies to children aged under 16. Their domicile (permanent home) follows the domicile of parents until they reach 16, at which time they can change to a domicile of their choice. |
| domicile of origin | This will normally be the domicile (permanent home) of your father (sometimes your mother) when you were born. |
| double taxation agreement | An agreement between governments of two countries to resolve taxation issues. They are designed to stop income being taxed twice. |
| double taxation relief | Taxation relief given where income would otherwise be taxed in two countries. |
| draw down | If you have contributed to a retirement annuity contract or personal pension plan, you can defer using the accumulated funds to purchase an annuity until you reach the age of 75. Between retirement age (usually 50) and the age of 75 you can, within set limits, draw income from your pension scheme. This is called "income draw down". |
| dual resident | A term used to describe you if you are resident in two or more countries at the same time. |