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Tax and treasury.

A deduction allowed by law in calculating a tax liability.

For example, by subtracting the deductions from (otherwise) taxable profits, before calculating the amount of tax payable, on the reduced net taxable profits.

This - relatively less valuable - type of tax relief is sometimes known as 'expense relief'.

Items already charged against accounting profits, and not adjusted for in tax computations, are automatically tax-relieved. Tax relief granted in this way is also expense relief.

This is the most common form of tax relief in practice for business expenditure.

Less commonly, more generous tax relief is given by deducting an amount directly from the amount of a tax liability.

This - relatively more valuable - type of tax relief is sometimes known as 'credit relief'.

Tax relief of the more generous 'credit relief' kind is also often called a 'tax credit'.

However (potentially confusingly) the term 'tax credit' may also - less commonly - refer to 'expense relief', as discussed above.

See also

• Charge on income
• Cost of debt
• Credit relief
• Deductions
• Disallowable expenditure
• Double taxation relief
• Expense relief
• Group relief
• Rollover relief
• Tax avoidance
• Tax computation
• Tax credit
• Tax planning
• Tax sparing