Deductions vs. Credits

A deduction reduces your taxable income — for example, deducting mortgage interest or student loan payments lowers the amount you’re taxed on. A credit, however, directly reduces what you owe. If you owe £2,000 in taxes and receive a £500 credit, your bill drops to £1,500. Knowing the difference helps you prioritize which benefits to claim.

Common Deductions

• Charitable donations

• Retirement contributions

• Education or childcare expenses

• Certain business costs if you’re self-employed
  Keep detailed records and receipts throughout the year; organization saves money at tax time.

Tax-Efficient Investing

Maximize contributions to retirement or savings accounts that offer tax advantages. Capital gains tax, for instance, applies to investment profits, but long-term holdings are often taxed at lower rates than short-term ones. Timing your sales strategically can reduce liabilities.

Working with Professionals

Tax software can handle simple filings, but if your finances are complex — multiple incomes, property ownership, or self-employment — consider hiring an accountant. Their fees often pay for themselves through optimized returns.