Jargon Buster

C

Capital
A lump sum of money.

Capital Gains Tax
The tax payable on profit made on the sale of assets or property other than your home.

Capital growth
An increase in the value of shares or other assets in a fund.

Capital and Interest Mortgage
A mortgage product where the payment you make each month covers the capital and interest on your loan.

Carry Back
Facility for members of personal pension schemes to have their contribution, or part of it, treated as being paid in the preceding tax year.

Carry Forward
The facility for members of personal pension schemes to carry forward any unused tax relief from any of the six years prior to the year in which the contribution was to be paid. Carry forward of unused relief was abolished in April 2001.

Cat Standards
Stands for (reasonable) Charges or Cost, (easy) Access and (fair) Terms and is a mark awarded by the Government to ISAs and mortgages which meet these standards.

Commission
The means by which independent financial advisers or salespeople are paid by an insurance company for placing business with them.

Contracting in/out
The process by which you can elect to stay in or opt out of the State Earnings Related Pension Scheme (SERPS).

Corporate bond
A form of investment offered by a corporation with the purpose of raising capital, in which the lump sum is repaid with interest at maturity. Corporate bonds can be bought and sold on the stock market.

Corporation tax
Applies only to limited liability companies and is chargeable on the company's profits.

Critical illness insurance
Pays a lump sum if you are found to suffer from one of a range of designated illnesses (normally including cancer, heart attack, and stroke among others). When a condition requires you to stop working for some time, worries are eased. So, normal practice is to have enough insurance to cover the mortgage, plus provide a year or two's income if your savings or other insurance will not provide. The policy usually pays out after surviving 28 days after diagnosis

D

Death after Retirement Benefits
The pension and lump sum paid to the deceased member's spouse and/or other dependants where death occurs after retirement or after the member's normal retirement date if s/he is retiring late.

Death in Service Benefits
The pension and lump sum paid to the deceased member's spouse and/or other dependants where death occurs while still working for his/her employer, before his/her normal retirement date.

Debit card
Operates like a credit card except that the normal amount is deducted directly from your bank account so that no debt is accrued.

Deed of Covenant
An agreement in a deed to transfer income from one person to another in a tax efficient way.

Defined Benefit Scheme
Also known as a Final Salary Scheme. This is the traditional form of company or occupational pension where your pension is calculated as a proportion of your salary in the last few years of work - with the proportion depending upon how many years you have been in your company scheme.

Defined Contribution Scheme
Also known as a Money Purchase Scheme. A scheme where the amount of a member's retirement benefits depends on the contributions paid into the scheme in respect of the member. The rate of the contributions is decided by the employer.

Distribution
Payments made to investors of income generated by an investment fund.

Dividend
The distribution to shareholders of a company's profits in proportion to the number of shares held.