CAUTION
This page is under review some information may be outdated

Illustration. Figures showing projected costs and/or returns from various packaged products in a format determined by the regulator.

Imputation System. The system of dividend taxation, where the company pays Advance Corporation Tax (ACT) on dividends, and the dividends are assumed to be paid net of basic rate tax. The shareholder receives a tax credit with the dividend cheque as proof of tax paid. Ceased on 6th April 1999 as a result of the abolition of Advanced Corporation Tax.

Imputed costs. Estimated costing of what a company gives up by not selling or leasing an asset rather than continuing to use it in production.

In Re. Latin, ‘in the matter of’; sometimes abbreviated to ‘re’. Used to head some law reports, followed by the name of the person or subject the case concerns.

Incapacity Benefit. A state income benefit payable in the event of sickness or disability to a qualifying person.

Incentive. See 'Contracting Out Incentive'.

Income. Money received from employment (earned income) or investments (unearned).

Income Support. State supplementary income payable to qualifying persons if their income from other sources falls below a state determined level.

Income Tax. Direct tax levied on income, whether earned or unearned.

Incorporation. The act of turning a business into a limited liability company.

Increment. Regular, automatic increase.

Indemnify. To provide an indemnity.

Indemnity. Guarantee payment or compensation following a financial loss.

Independent Financial Adviser. Someone authorised by the PIA and qualified by experience and examination to provide financial advice, who is not working for any single product provider company.

Independent Taxation. Separate taxation of husband and wife introduced in April 1990.

Index. List of items in performance or alphabetical order.

Indexation. Price adjustment which allows capital or income to take account of, or benefit from, inflation.

Indexed. Also Index-linked. Growth in income or capital which follows one of the many growth or performance indices e.g. Retail Prices Index, Average Earnings Index.

Indirect Costs. Costs which cannot be related directly to the production of specific goods or services, such as rent, overheads and selling costs.

Indirect Tax. A tax that is not paid directly to the government, like income tax, but through another medium involving choice, such as buying goods which have VAT charged on them. See Direct Tax.

Individual Pension Accounts. (IPA) A form of investment medium introduced in April 2001. They enjoy the same tax advantages as other eligible investment available to exempt approved pension schemes. Can be transferred between pension arrangements.

Individual Savings Account (ISA). A tax free investment contract, allowing investment into cash, life assurance and stocks and shares. It replaced PEPs and TESSAs for new contributions from April 1999. Different investment limits apply to maxi and mini ISAs, can be funded by lump sum or regular saving.

Industrial Assurance. Low value life assurance and savings policies issued by certain life companies and friendly societies. Premiums used to be collected by hand, door to door, but may now be paid by monthly bank mandate.
See ‘Home Service’.

Industrywide scheme. Scheme set up by employers in the same industry, having the advantage of offering continuous accrual of benefit if moving from one employer to another within the industry i.e. obviates potential reduced benefit through transfers.

Inflation. In simple terms, when production costs increase for the same level of output, the result is often an increase in the product price. This in turn results in a reduction in purchasing power, because more is needed to buy the same goods. This leads to higher wage demands, which leads to higher production costs, and so on. The results of this cycle is price inflation, which is what is generally meant by the term inflation.

Inflation Accounting. A system of accounting, such as current cost accounting, that seeks to compensate for the deficiencies in conventional historic cost accounting in taking in to account the variable cost of money during an inflationary period.

Inherit. To receive something from the estate of someone who has died.

Inheritance Tax. Tax payable on certain gifts and transfers during lifetime. Also payable on estate at death if its value exceeds the inheritance tax threshold figure.

Initial Units. With some unit linked products, management expenses are recouped by having two types of unit. Initial or capital units are purchased by new contributions for one or two years, then accumulation units are purchased thereafter. The initial units have a higher charge to help offset expenses.

Injunction. Court order forbidding a particular action or inaction.

Insider Trading. The buying/selling of shares on a recognised stock exchange by someone employed (currently or within the last six months) by the company concerned, and who is in possession of restricted information not generally available on the market. The Criminal Justice Act 1993 contains legislation attempting to deal with the problem.

Insolvency. The inability of a business to meet its liabilities.

Inspector. In insurance terms, an ‘inspector of agents’ i.e. someone representing an insurance company who calls upon intermediaries who hold an agency with the company. The role is generally seen as a new business generating one.

Institutional Investor. It is estimated that over 90% of UK shares are owned by such investors, which are generally pension funds, unit trusts and insurance companies.

Instrument. A legal document, generally relating to a financial transaction.

Insurable Interest. A basic requirement of insurance in order for the contract to be valid; there must be present the possibility for monetary loss in the event, say, of the death of the life assured.

Insurance. In return for agreed payments, the recipient agrees to recompense the payer in the event of certain events e.g. loss, damage, injury, death. Encapsulated in the phrase ‘You pay the small cheques, we pay the big ones’.

Insurance Broker. Somebody who derives an income from arranging insurance policies.

Insurance Brokers Registration Council. A body established under the Insurance Brokers Registration Act 1977 to register and regulate all those who wish to be known as 'Insurance Broker'. No longer in existence. IBRC members are now controlled directly by the Financial Services Authority.

Insurance Ombudsman Bureau. A body established by insurance companies in 1981 to investigate consumer complaints.

Insure. To protect something of value by means of risk transfer i.e. payment of small regular sums to a specialist company (insurance company) so that in the event of loss or damage, the company will pay monetary compensation.

Insurers. General term for insurance companies.

Intangible. Property or belongings which cannot be touched or seen, but which have value e.g. goodwill in a business.

Intangible Asset. Non-physical asset, such as goodwill, trademark or patent.

Inter Spouse Transfers. A tax-free transfer under Inheritance Tax rules.

Inter Vivos. Used in the phrase ‘gift inter vivos’, or gifts between living individuals and used in conjunction with the seven year gifting period for potential Exempt Transfers (PETs) under Inheritance Tax rules.

Interest.

1. Money received as income from investments.
   

2. Money paid for the use of borrowed money.
   

3. Part ownership of something e.g. an interest in possession, or controlling interest.

Interest in Possession. An entitlement to the income from trust property.

Interim. Occurring during a company’s financial year rather than at its end. Interim results are often accompanied by interim dividends, whereas the year end accounts may give rise to final dividends.

Interim Deed. A temporary measure whilst waiting for the full and final version to be engrossed. Often used when establishing group pension arrangements.

Intermediaries. Generic term referring to anyone who assists two other parties to do business e.g. IFA effectively bringing together client and insurance company.

Intestacy. The result of having died intestate i.e. without a valid will.

Intestate. Without a valid will.

Intrinsic. Inherent and essential to the object concerned e.g. intrinsic value may have no relationship to the real value, the intrinsic value being, say, sentimental.

Introducers Agreement. An agreement used where a non-registered individual introduces a potential client to an authorised financial adviser. Necessary where the introduction is to a tied agent, as the inference of the introduction is that not only is the adviser being recommended, but also the adviser’s limited range of products. In general use with IFAs also. In both cases, such agreements formalise the relationship to ensure the introducer does no more than introduce.

Inventory. A list of stock or contents.

Invest. To put money into trading ventures, existing contracts or organisations (e.g. shares or building societies) with a view to producing income and/or increases in capital value.

Investment. The use and management of money with the aim of increasing its value by means of generating income and/or capital growth.

Investment Bond. A single premium unit linked life policy containing a nominal amount of life cover. A non-income producing investment. Any partial or full encashment proceeds are subject to special tax rules.

Investment Business. Under the Financial Services Act 1986 this phrase has a specific meaning, covering all life assurance, pensions, investments, but not covering most PHI, term assurance and medical insurance contracts. The common link is the investment element.

Investment Managers Regulatory Organisation. (IMRO) Self Regulatory Organisation which regulates investment managers, including those who advise institutional or corporate clients. Membership includes unit trust, OEIC, investment trust and pension fund managers, banks and investment management subsidiaries of life assurance companies.

Investment Trust. A public limited company which invests in shares of other companies. Its shares are traded on Stockmarket. They are not true trusts and can borrow money to buy additional investments.

Investor. Person or organisation who invests money or time.

Investor Protection. The sole purpose of the Financial Services Act 1986.

Investors Compensation Scheme. A scheme established by the S.I.B. in August 1988 to help recompense for losses within certain limits by failure on the part of the authorised business.

Investors Compensation Scheme Levy. General term for payment into the Investors Compensation Scheme.

Invisible.

1. Invisible Assets - assets which have value but cannot be seen, such as patents.
   

2. Invisible Earnings - foreign currency earned by providing services, rather than goods, abroad e.g. insurance.

Invitation to Treat. A pre- offer and acceptance stage which may lead to formulation of a contract e.g. goods displayed in a window are deemed an invitation to treat, not an offer for sale.

Invoice. A formal request for payment for goods and/or services previously supplied.

Irredeemable. Certain government bonds are irredeemable (e.g. war loans) which means that whilst they pay interest they have no maturity date, and so will be repaid only at the discretion of the government.

Irrevocable. Cannot be rescinded or changed. An irrevocable trust is a necessity for exempt approval of a group pension scheme.

ISA Mortgage. An interest only mortgage where the outstanding loan at redemption will be repaid using the proceeds of a series of ISA investments. The ISAs do not guarantee repayment of the loan at the redemption date.

Issued Capital. The amount of the authorised capital of a limited company that has actually been allocated i.e. not necessarily 100%.
See ‘Authorised Capital’