London Life - Jargon Buster

Use our Jargon Buster to cut through the complicated language financial services companies sometimes use, and find out what it really means. The list is in alphabetical order so you can scroll down to look up words and their meanings:

Tax credit
Until April 2004, a fund manager could claim a 10% tax credit on UK share dividends from Her Majesties Revenue and Customs (HRMC). After this date, the tax credit is no longer available.
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Tax Free Lump Sum (TFLS)
The amount of cash you can withdraw from your pension when you retire free from tax. This is normally restricted to 25% of the value of your fund or its equivalent.
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Term
The length of time during which a policy runs, or, in the case of a mortgage, the period by the end of which you must have repaid your borrowings.
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Terminal Bonus
A bonus that may be added when your product is cashed in or it matures. Sometimes known as Final bonus. Terminal bonus is not guaranteed and its level can increase or decrease or it can be withdrawn altogether.
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Terminal Illness
Advanced or rapidly progressing incurable illness where, in the opinion of an attending consultant or a Chief Medical Officer, the life expectancy is likely to be no greater than 12 months.
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Tax Exempt Special Savings Account (TESSA)
A savings account, in which the interest is paid to you tax free. Since April 1999, no new TESSAs have been available, but when an existing TESSA matures (reaches the end of its term); the money can be paid into a TESSA-only ISA.
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Transfer
The transfer of a pension pot between products or to a different product provider. There may be charges.
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Trivial Commutation (pensions)
The option to take a small pension fund as a one-off lump sum, subject to an income tax charge, instead of buying a lifetime annuity.

It is normally available to those aged 60 or more who’s private and company pensions have a total combined value that does not exceed a threshold.

For the tax years up to and including 2011/12 the threshold equals 1% of the standard lifetime allowance. For later tax years it is set at Ł18,000 but this may change.
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