UK money, decoded
The jargon that actually matters, ISAs, pensions, tax and retirement, in one line each. Figures are for the 2026/27 tax year.
Rates & the basics
Base rate
The Bank of England's base rate is the interest rate it charges other banks. It feeds through to what you earn on savings and pay on mortgages and loans, the quiet baseline behind most money decisions (and where this site gets its name).
AER
Annual Equivalent Rate, a standardised way to show savings interest including compounding, so you can compare accounts fairly.
APR
Annual Percentage Rate, the standardised yearly cost of borrowing, including interest and most fees, for comparing loans and credit cards.
ISAs & savings
ISA
Individual Savings Account, a tax-free wrapper. Pay in up to £20,000 in 2026/27 and pay no UK tax on the interest, dividends or growth.
Cash ISA
An ISA that holds savings; the interest is tax-free. Best for short-term money you can't risk.
Stocks & Shares ISA
An ISA holding investments such as funds and shares. Growth and dividends are free of income and capital gains tax. See the Compound Growth calculator.
Lifetime ISA (LISA)
Lets under-40s save up to £4,000 a year (within the £20,000 limit) with a 25% government bonus, for a first home or from age 60.
Junior ISA (JISA)
A tax-free account for under-18s, with a £9,000 annual allowance in 2026/27.
Personal savings allowance
Tax-free interest outside an ISA: £1,000 for basic-rate and £500 for higher-rate taxpayers; nil for additional-rate.
Pensions
SIPP
Self-Invested Personal Pension, a personal pension you control, with tax relief in and tax-free growth until you draw it.
Annual allowance
The most you can usually pay into pensions each year with tax relief, £60,000 in 2026/27, or 100% of earnings if lower.
MPAA
Money Purchase Annual Allowance, drops your pension allowance to £10,000 once you've flexibly accessed a defined-contribution pension.
Relief at source
How most personal pensions get relief: you pay from taxed income and the provider adds 20%; higher-rate taxpayers claim the rest. See what HMRC owes you.
Salary sacrifice
Giving up salary so your employer pays it into your pension, saving income tax and National Insurance. Try the Salary Sacrifice calculator.
Drawdown
Taking a flexible income directly from an invested pension pot, rather than buying an annuity.
Annuity
An insurance product that turns a pension pot into a guaranteed income for life.
Tax & pay
Personal allowance
Income you can earn tax-free, £12,570 in 2026/27, withdrawn by £1 for every £2 earned over £100,000.
Marginal tax rate
The tax and NI you pay on your next £1 of income. See your rate in the Take-Home Pay calculator.
The 60% trap
Between £100,000 and £125,140 the personal allowance is withdrawn, creating an effective ~60% tax rate on income in that band.
National Insurance
A tax on earnings: employees pay 8% between £12,570 and £50,270 and 2% above (2026/27). It also builds State Pension entitlement.
Capital Gains Tax (CGT)
Tax on profit when you sell assets like shares or a second home. Tax-free allowance £3,000 in 2026/27; rates 18% and 24%. See the tax rates.
Dividend allowance
Dividend income you can receive tax-free outside an ISA, £500 in 2026/27.
Adjusted net income
Your total taxable income less things like gross pension contributions and Gift Aid, the figure used to test the £100,000 personal-allowance taper.
Tax year
The UK tax year runs from 6 April to 5 April the following year.
Retirement & investing
State Pension
Paid from State Pension age. The full new State Pension is about £12,548 a year (£241.30 a week) in 2026/27. See the Retirement Number calculator.
Triple lock
Raises the State Pension each year by the highest of inflation, earnings growth, or 2.5%.
The 4% rule (rule of 25)
A guideline: withdraw ~4% of your pot in year one, rising with inflation. Multiply your target income by 25 to estimate the pot needed.
Compound growth
When your returns earn returns of their own, so a pot grows faster the longer it's left. See the Compound Growth calculator.
Index fund
A low-cost fund that tracks a market (such as global shares) rather than trying to beat it.
OCF / platform fee
The Ongoing Charges Figure is a fund's yearly cost; the platform fee is what your provider charges to hold it. Both eat into returns.
FSCS
The Financial Services Compensation Scheme protects savings up to £120,000 per person per bank or building society, and investments up to £85,000 per person per firm, if the firm fails.
Net worth
Everything you own minus everything you owe, the clearest measure of progress. Track it with the free Net Worth Tracker.
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General education only, not financial advice. Figures reflect the 2026/27 UK tax year and can change. Sources: gov.uk, HMRC, PLSA.