Definition
Amounts which you can deduct from your annual income to reduce the amount on which you have to pay tax. For instance, if your income before deduction of reliefs is £20,000, and you made pension contributions in the year of £1,000, you could deduct £1,000 from £20,000 to produce a total income of £19,000. That is because pension contributions are payments on which the Inland Revenue allows you to get relief.
From total income, you would also deduct any allowances, including your personal allowance of £4,895 in the year 2005-2006 for people under 65, to produce your taxable income.