Something which reduces your taxable income (which is the aggregate of all your incomes, less deductions and reliefs after your personal allowances). A relief may also reduce your tax liability although your taxable income is not reduced. For example farmer's averaging may reduce your tax liability if you transfer income from one year to another, and your marginal tax rate is lower in that other year.
Personal Pensions, Group Personal Pensions (GPPs) and Stakeholder Pensions For these types of scheme, tax relief is the process by which the Inland Revenue encourages you to save by crediting the basic-rate income tax you have already paid on your contributions, to your individual pension arrangement. And, if you are a higher-rate taxpayer, you can reclaim the difference between the basic and higher rate of tax through your tax return. Occupational Pensions For occupational pensions schemes, tax relief is the process by which the Inland Revenue encourages you to save by having your contributions taken out of your pay before your tax is deducted. None
A saving of tax arising from the right to deduct particular types of payments or losses from taxable income or gains. This includes payments for specific purposes that are statutorily allowable (such as personal pension contributions), as well as the general right to deduct losses from gains for capital gains tax purposes, or business losses from other income for income tax purposes.