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GLOSSARY OF TERMS
Alternative Investment Market
(AIM)
A sub-market of the London Stock Exchange, allowing smaller companies to float shares with a
more flexible regulatory system than is applicable to the Main Market.
Annual Management Charge
(AMC)
The annual fee that the fund company charges to cover the costs of managing the fund. This is
typically paid from the fund.
Assets Under Management
(AUM)
The aggregate market value of all of the assets which a financial institution such as a mutual fund,
venture capital firm or brokerage house manages on behalf of its clients.
Business Property Relief
(BPR)
The more common term for Business Relief, BPR can remove qualifying assets from the estate of
the deceased, for inheritance tax purposes.
Capital Gains Tax
(CGT)
A tax on profits made on the disposal of certain assets.
Discretionary Trust
A trust in which the number of shares of each beneficiary are not fixed by the settlor in the trust
deed, but at the discretion of the trustees.
Enterprise Investment Schemes
(EIS)
A series of UK tax reliefs launched in 1994 to succeed the Business Expansion Scheme, EIS is
designed to encourage investments in small unquoted companies carrying on a
qualifying trade in the UK.
Governments Actuary’s
Department
(GAD)
GAD provides actuarial analysis to the public sector from the public sector.
Her Majesty’s Revenue and
Customs
(HMRC)
A non-ministerial department of the UK Government responsible for the collection of taxes, the
payment of some forms of state support, and the administration of other regulatory regimes
including the national minimum wage.
High Net Worth
(HNW)
Investors with over £200k in investable assets or an annual income in excess of £100k per annum.
ICAP Securities and Derivatives
Exchange
(ISDX)
Formerly called the PLUS market, the ISDX is an equity market for small and medium sized
companies who want to raise money from investors to finance and grow their businesses.
Individual Savings Account
(ISA)
A scheme allowing individuals to hold cash, shares, and unit trusts free of tax on dividends,
interest and capital gains.
Inheritance Tax
(IHT)
Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more
than £325,000 (the current nil rate band) when they die.
Investment Risk
The probability or likelihood of occurrence of losses relative to the expected return on any
particular investment.
Joint Venture
(JV)
A business agreement in which the parties agree to develop, for a finite time, a commercial
enterprise undertaken jointly by two or more parties which otherwise retain their distinct
identities.
Limited Liability Partnership
(LLP)
A partnership in which each member is responsible for the general management of the
partnership and where their liability is limited to their capital contribution. It therefore exhibits
elements of both partnerships and corporations. In an LLP, one partner is not liable for another
partner’s misconduct or negligence.
Liquidity Risk
The risk stemming from the lack of marketability of an investment that cannot be bought or sold
quickly enough to prevent or minimise a loss.
Net Asset Value
(NAV)
The value of an asset after deduction of any liabilities.
Nil Rate Band
The value of an estate that is not subject to Inheritance Tax in the UK.
Professional Indemnity
Insurance
(PI)
PI covers costs and expenses incurred in your legal defence, as well as any costs that may be
awarded, if you are alleged to have provided inadequate advice, services or designs that cause
your client to lose money.
Seed Enterprise Investment
Scheme
(SEIS)
The Seed Enterprise Investment Scheme (SEIS) offers generous tax efficient benefits to investors in
return for investment in small and early stage start-up businesses in the UK.
Small and Medium-Sized
Enterprises
(SMEs)
Businesses with fewer than 250 employees and less than £15m in net assets.
Special Purpose Vehicle
(SPV)
A corporate structure (typically a limited company) established specifically to allow multiple
investors to invest in a specific asset(s).
Unregulated Collective
Investment Schemes
(UCIS)
Investments not regulated by the Financial Conduct Authority (FCA) that broadly speaking involve
a pooling of investors money and an absence of day to day management and control over the
underlying investments. UCIS are subject to strict rules regarding to whom they can be promoted.
Venture Capital Trusts
(VCT)
A quoted company established to invest at least 70% of investors funds in VCT qualifying assets
(typically unlisted and smaller AIM quoted companies). Investors in a VCT can claim tax relief on
their investment and receive tax free dividends.
