Tax Planning Glossary & Definitions
Comprehensive glossary of international tax planning terms and definitions. Essential reference for understanding UK-UAE cross-border tax concepts and terminology.
A
Advance Assurance
HMRC confirmation that a proposed investment or structure will qualify for specific tax reliefs before implementation.
Annual Tax on Enveloped Dwellings (ATED)
UK tax charged annually on residential properties worth over £500,000 held by companies, partnerships with company members, or collective investment schemes.
Anti-Avoidance Rules
Legislation designed to prevent artificial arrangements created primarily to avoid tax obligations.
B
Business Asset Disposal Relief (BADR)
UK relief providing reduced capital gains tax rate of 10% on qualifying business disposals, subject to lifetime limit.
Beneficial Ownership
The ultimate ownership or control of an entity or asset, looking through nominee arrangements and corporate structures.
Base Erosion
Reduction of taxable income through artificial arrangements that shift profits to low-tax jurisdictions.
C
Capital Gains Tax (CGT)
Tax on the profit made when disposing of assets that have increased in value, such as property, shares, or business assets.
Controlled Foreign Company (CFC)
Anti-avoidance rules that can attribute profits of foreign subsidiaries to UK resident companies under certain conditions.
Centre of Vital Interests
Test used in double tax treaties to determine tax residency based on where an individual's personal and economic relations are closest.
D
Double Tax Treaty
Agreement between two countries to avoid taxing the same income twice and provide mechanisms for resolving disputes.
Domicile
Legal concept determining long-term connection to a country, affecting UK inheritance tax and remittance basis eligibility.
Deemed Domicile
UK tax concept treating long-term residents as UK domiciled for tax purposes after 15 years of residence.
E
Enterprise Investment Scheme (EIS)
UK tax relief scheme providing income tax relief, CGT exemption, and loss relief for investments in qualifying unquoted companies.
Economic Substance
Requirement for entities to have adequate substance in their jurisdiction of incorporation to qualify for tax benefits.
Exit Tax
Tax charged when assets or entities are moved from one tax jurisdiction to another, typically on unrealized gains.
F
Free Zone
Special economic zones in UAE offering various benefits including potential corporate tax exemptions for qualifying activities.
Foreign Tax Credit
Relief for tax paid in foreign jurisdictions to prevent double taxation of the same income.
Fiscal Transparency
Tax treatment where an entity is ignored for tax purposes, with income and gains attributed directly to underlying owners.
G
General Anti-Abuse Rule (GAAR)
UK legislation targeting abusive tax arrangements that are artificial and lack commercial substance.
Golden Visa
UAE residence visa program offering long-term residency for investors, entrepreneurs, and skilled professionals.
Gross Assets Test
Requirement for companies to have gross assets below specified thresholds to qualify for certain tax reliefs like EIS or SEIS.
H
Hybrid Mismatch
Arrangements exploiting differences in tax treatment of entities or instruments between jurisdictions.
HMRC
HM Revenue and Customs - the UK's tax, payments and customs authority responsible for collecting taxes.
Holding Company
Company that owns shares in other companies, often used for tax planning and corporate structuring purposes.
I
Inheritance Tax (IHT)
UK tax charged on estates above £325,000 on death and on certain lifetime transfers, currently at 40%.
International Tax Planning
Legitimate structuring of affairs to minimize tax burden across multiple jurisdictions while maintaining compliance.
Investor Relief
CGT relief providing 10% rate for external investors in unlisted trading companies, subject to qualifying conditions.
J
Joint Venture
Business arrangement where parties combine resources for specific projects, with various tax implications depending on structure.
Judicial Precedent
Legal principle where court decisions create binding interpretations of tax law for future cases.
K
Knowledge Intensive Company
EIS/VCT qualifying company with higher thresholds for age and investment limits due to R&D focus.
L
Limited Liability Partnership (LLP)
UK business structure combining partnership flexibility with limited liability, with specific tax transparency rules.
Loss Relief
Tax provisions allowing losses to be offset against profits in the same or different periods, or against other income.
Loan Relationship
UK tax rules governing the treatment of interest and other returns on corporate debt.
M
Mutual Agreement Procedure (MAP)
Treaty mechanism for resolving disputes between tax authorities to eliminate double taxation.
Management and Control
Test for determining corporate residence based on where key management decisions are made.
Multilateral Instrument (MLI)
OECD instrument implementing BEPS measures across multiple tax treaties simultaneously.
N
Non-Domiciled
UK tax status for individuals not domiciled in the UK, potentially eligible for remittance basis taxation.
Nil Rate Band
UK inheritance tax threshold (£325,000) below which no IHT is charged, with additional residence nil rate band for family homes.
Nominee
Person or entity holding assets on behalf of another, with specific tax transparency and reporting requirements.
O
OECD
Organisation for Economic Co-operation and Development, setting international tax standards including BEPS initiatives.
Offshore
Jurisdictions outside an individual's or company's home country, often used for tax planning and asset protection.
Ordinary Residence
Former UK tax concept (pre-2013) determining tax obligations based on habitual residence patterns.
P
Permanent Establishment (PE)
Fixed place of business or dependent agent creating tax obligations in a jurisdiction under treaty rules.
Principal Private Residence Relief
CGT exemption for gains on disposal of an individual's main home, subject to qualifying conditions.
Profit Shifting
Moving profits from high-tax to low-tax jurisdictions through transfer pricing or other arrangements.
Q
Qualifying Corporate Bonds (QCBs)
UK corporate bonds exempt from capital gains tax, with specific qualifying conditions.
Qualifying Investment
Investment meeting specific criteria for tax reliefs such as EIS, SEIS, or VCT benefits.
R
Remittance Basis
UK tax basis for non-domiciled individuals, taxing only UK income and gains plus foreign income brought to UK.
Residence
Tax status determining liability to tax in a jurisdiction, based on various tests including days present and ties.
Rollover Relief
CGT relief allowing deferral of gains when proceeds are reinvested in qualifying business assets.
S
Seed Enterprise Investment Scheme (SEIS)
UK tax relief scheme providing 50% income tax relief for investments in very early-stage companies.
Statutory Residence Test (SRT)
UK rules determining tax residence based on days present, automatic tests, and sufficient ties.
Substance Requirements
Economic activity and presence requirements for entities to qualify for tax benefits in their jurisdiction.
T
Transfer Pricing
Rules ensuring transactions between related entities are priced as if between independent parties.
Tax Haven
Jurisdiction with low or no taxes and high financial secrecy, often used for tax planning structures.
Tie-Breaker Rules
Treaty provisions determining tax residence when an individual or entity qualifies as resident in multiple countries.
U
Unremittable Income
Foreign income that cannot be brought to the UK due to legal restrictions, potentially exempt from UK tax.
Underlying Tax
Foreign corporate tax on profits from which dividends are paid, potentially creditable against UK tax.
V
Venture Capital Trust (VCT)
UK listed company investing in small unquoted companies, offering tax reliefs to individual investors.
VARA
Virtual Assets Regulatory Authority - UAE regulator for cryptocurrency and digital asset activities.
W
Withholding Tax
Tax deducted at source from payments such as dividends, interest, or royalties to foreign recipients.
Worldwide Taxation
Tax system where residents are taxed on global income and gains, regardless of source.
X
Xenophobic Taxation
Discriminatory tax treatment of foreign persons or entities, prohibited under most tax treaties.
Y
Year of Assessment
UK tax year running from 6 April to 5 April, used for income tax, CGT, and other personal taxes.
Z
Zero Rate
Tax rate of 0%, such as UAE corporate tax rate for profits below AED 375,000.
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Our tax planning glossary reflects ICAEW professional standards and extensive experience in international tax planning. All definitions are current and reflect latest legislation.