How a bougette became the Budget (and a bag a briefcase)

Why does the tax year end on 5 April? What is the reasoning behind income tax assessment under different schedules? Why is the Exchequer so called?

With the Budget looming, now's the time to delve into some financial trivia for the meaning behind common financial terms and practices. Technology is not solely responsible for spawning buzz words: many have surprisingly ancient derivations.

The tax year


In 1752 England switched from the Julian to the Gregorian calendar to bring it in line with mainland Europe. As a consequence, that September lost 11 days.

Traditionally, 25 March (Lady Day) marked the beginning of a new legal year, at which time outstanding taxes, rents and debts became due for payment. Debtors objected to paying 11 days early, so the end of the tax year moved forward to its present date.

Income tax schedules


At the end of the eighteenth century Prime Minister William Pitt the Younger introduced legislation forcing taxpayers to disclose their entire income to one official. It was a highly unpopular measure and was deemed an infringement of civil liberties.

In 1803 the law changed to allow different types of income to be charged under different schedules. Returns of income from rents, investments or business were assessed by separate officials, thereby maintaining an individual's privacy.

Two hundred years later we have reverted to Pitt's original model, with all returns now filed with HM Inspector of Taxes in what was once a breach of privacy laws.

Budget


Budget comes from the old French bougette, meaning 'little bag', presumably because one's entire wealth could be contained within. Now the little bag has been famously superseded by a battered red briefcase.

Exchequer


The Exchequer has existed as a government department for a thousand years. Originally it controlled the income and expenditure of the Crown and kept account of the King's borrowings. The sheriff spread a checked cloth across a table and used pebbles in the squares as a form of abacus to help keep track of monies exchanged. Exchequer therefore literally means 'from the check' and a cheque was originally a bill drawn against the Exchequer. Exchequer officers were Escheators and their underhand dealings gave us the word 'cheat'.

Sterling


After 1066 the Normans used their own French coins in Britain, each impressed with a small star. Norman French for little star was esterlin, which became Anglicised to 'starling' or 'sterling'

Pennies are believed named after the seventh-century King Penda of Mercia, although the Romans used 'denarius' for small coins. Shilling comes from the Old English 'to divide' when coins were often cut to make smaller denominations.

The pound sterling was a pound weight of esterlin, roughly 240 coins. 'Libra' is Latin for 'to weigh', hence the representation of pre-decimal coinage as L s d.

Dollar


During a coin shortage the German Joachimstaler was used in the UK, its name being shortened to 'taler'. The Scots, in particular, used 'taer' to distinguish it from English coins.

The Mexican peso circulating widely in the US was similar, so Scottish settlers also called them talers, from which the term dollar evolved.

Pirates tell tales of Pieces of Eight, Spanish silver crowns deemed the same value as a dollar. These coins were literally cut into eight pieces called 'bits' to make small change. The dollar sign, $, represents a figure of eight cut through.

Counterfoil


Before written accounts, the Exchequer recorded monies owed on notched hazel sticks. The size of the sticks and spacing of the notches represented different amounts. After the record had been made the sticks were split in half lengthways, with the two pieces being called the stock and the counterfoil. One was kept by the Exchequer and the other handed to the person advancing money.

Tally


The Exchequer's hazel rods were called tally sticks, from the French tallier, 'to cut'. Disputes were resolved by comparing the two halves of the stick to see if they tallied and the men dealing with the money were talliers or tellers.

Tally sticks were used by the Exchequer until 1834, when orders were given to burn them. They were fed into the furnaces that heated the House of Lords but the fires got out of hand and the resultant conflagration destroyed the old Parliament buildings. Ornamental ironwork at the Public Record Office in Kew was designed to portray tally sticks.

Bank


An Italian merchant's trading bench was known as a banca. Eventually the term came to describe any venue for the lending or exchange of money.

Should the merchant's business fail, his goods were seized and his counter broken or rotta. Banca rotta, or bankrupt, is therefore simply a broken bench.

However, this is not how the financially embarrassed became known as 'broke'. Renaissance Europe was the home of the first credit card - small ceramic tiles impressed with a customer's credit limit, which were handed over with any request for funds. If the limit was exceeded the teller broke the tile.

Capital


'Capital', 'chattel' and 'cattle' share the same word root from a time when wealth was measured by ownership of livestock rather than by coin and where transactions were conducted under the barter system. Even 'pecuniary' comes from the Latin pecunia, meaning wealth from livestock. Old coins showed images of cattle to denote their value.

Audit


Audit pre-dates written accounts. Auditus is Latin for a hearing and harks back to the time when accounts were delivered verbally.

Economy


Household management was the original Greek sense of economy. It was not applied to the management of a country's resources until the seventeenth century, when it became synonymous with political economy.

Business


'Bisignisse' was Old English Northumbrian for 'care or anxiety'. No change there then!