Stamp Duty tops the list of confusing financial terms

Middle age senior woman sitting at the table at home working using computer laptop clueless and confused expression with arms and hands raised.

One of the biggest barriers for people trying to better understand personal finance is the jargon that is often used. There are simply too many terms and phrases to learn and understand. In fact, research has shown that eight in 10 Brits are often baffled by financial and investment jargon. Topping the list of confusing financial terms is ‘Stamp Duty’ according to a new study.

So, what is it about this term that Brits find confusing? What other terms are particularly baffling? And why is it important for Brits to improve their financial literacy?

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Stamp Duty confuses Brits

According to a study by Eurotrader, ‘Stamp Duty’ is the financial term that has seen the biggest increase in searches over the past year. According to Eurotrader’s data, the term was searched for 1,432,000 times in 2021, compared to 551,500 times in 2020, representing a 160% increase.

So what is Stamp Duty? Well, it’s a tax that you pay when you buy property in England or Northern Ireland over a certain value. The current Stamp Duty threshold for residential properties is £125,000 unless you’re a first-time buyer, in which case it’s £500,000.

The UK housing market has been a hot personal finance topic in the last 18 months. And the ‘Stamp Duty holiday’ is one of a number of factors that have sent the market into a frenzy. Although the holiday expired on 30 September and rates have returned to normal, there is still a lot of interest in Stamp Duty.

Other financial terms that Brits find confusing

Stamp Duty isn’t the only financial term that Brits have been keen to learn more about.

For example, despite playing a very significant role in most people’s financial lives, the research from Eurotrader shows that the term ‘credit score’ still confuses a lot of Brits. There were a total of 4,360,000 searches for ‘credit score’ in 2021, up 76% on the number of searches in 2020.

Other confusing financial terms that have seen an increase in searches include ‘exchange of contracts’, ‘limited liability’, and ‘annual percentage rate’.

Here is a list of the top ten terms that have seen the greatest increase in search volume:

Rank

Keyword

Y2020

Y2021

% increase

1

Stamp Duty

551,500

1,432,000

160%

2

Exchange of contracts

13,500

24,000

78%

3

Credit score

2,481,000

4,360,000

76%

4

Limited liability

19,100

33,100

73%

5

Quarterly statements

60

100

67%

6

Corporation Tax

164,800

267,400

62%

7

Annual percentage rate (APR)

1,940

3,010

55%

8

Buildings insurance

91,100

134,000

47%

9

Conveyancing

172,700

252,000

46%

10

After tax

6,780

9,600

42%

 

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The importance of financial literacy and where to find good financial resources

According to Nick Whitehead, head of product at Eurotrader, “There is a need for increased financially focused resources and education to help consumers across the country get a better grasp of financial terms.”

Having a good grasp of financial terms and being financially literate can help you make better and more informed decisions about your money. It can also help you prepare better for the future.

After catching many of us off guard, one of the most important lessons the pandemic has taught us is the value of personal financial responsibility and being financially prepared for unexpected events. This can only be achieved by first improving our financial literacy.

MyWalletHero has a wealth of resources as well as guides on personal finance topics ranging from Stamp Duty to insurance to help you on this journey.

There are also many other free online resources to help you improve your financial knowledge. A few worth checking out include the government’s MoneyHelper service, Citizens Advice and Unbiased.com.

The post Stamp Duty tops the list of confusing financial terms appeared first on The Motley Fool UK.

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