tax deduction vs tax reliefs

Discussion in 'SP5' started by dimitris13, Mar 12, 2020.

  1. dimitris13

    dimitris13 Member

    Hi there,

    what is the difference between tax deductions and tax reliefs?
    is it :
    tax deduction: reduces the taxable income under which we get taxed
    tax reliefs: reduces the amount of tax paid ?

    my question arises actually from apr 2014 q3
    where in pension product says: tax relief on contributions
    and in benefits of borrowing: interest payments and tax deductible.

    thanks
     
  2. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    Hi, I dont think there is really a great difference to worry about here. Certainly not at the level of an SP5 exams. Deduction seems to refer to something a company deducts from profits to get to the profit before tax (like expenses or interest). Relief seems to refer to a contribution that reduces taxable earnings for an individual which may be voluntary, such as a pension contribution.
     

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