In business and finance, equity is the value of an entity minus its liabilities.
For example, if a company has assets of £100 million and debts of £80 million, its equity would be £20 million.
In the UK, equity is also used as a term for ownership in a business or enterprise.
For example, if someone owns 50% of the equity in a company, they would own 50% of the company’s shares and have a say in how it is run.
Equity can also refer to the value of property or land, minus any money owed on it.
For example, if a house is worth £200,000 and the owner still owes £150,000 on their mortgage, the equity in the property would be £50,000.
Finally, equity can also refer to the difference between the value of an asset and the amount of money owed against it.
For example, if someone owns a car worth £5,000 but still owes £4,000 on their loan, the equity in the car would be £1,000.
This definition is also related to equity release, where people unlock tax-free cash from their assets.