Accountants in Coventry
                     Importance of  Tax Planning
While the term “tax planning” is frequently used, it is not necessarily well understood. Here’s what you need to know.
Tax planning means deferring and 
flat out avoiding taxes by taking 
What tax planning really advantage of beneficial tax-law 
provisions, increasing and 
means accelerating tax deductions and 
Tax planning is the art of arranging your affairs in tax credits, and generally making 
ways that postpone or avoid taxes. By employing 
effective tax planning strategies, you can have more maximum use of all applicable 
money to save and invest or more money to spend. breaks available under our 
Or both. Your choice.
beloved Internal Revenue Code.
How are tax planning and financial planning connected?
Financial planning is the art of implementing strategies that help you reach your financial goals, be they short-
term or long-term. That sounds pretty simple. However, if the actual execution was simple, there would be a lot 
more rich folks.
Tax planning and financial 
planning are closely linked, 
because taxes are such a large 
expense item as you go through 
life. If you become really 
successful, taxes will probably 
be your single biggest expense 
over the long haul. 
Types of Tax Planning
There are a few different types of tax planning that are useful for individual people, 
companies and organisations. Some of the tax plans include; short term tax plans, 
long term tax plans, permissive tax plans and purposive tax plans. The short term 
planning allows you to reduce taxes at the end of the income year. Long term plans 
allow you to plan at the end of the beginning or end of the year,
When you start tax planning, you can find 
many guides online and you can also speak 
How It Works to financial advisors and solicitors to help get you started and give you all the important 
information that you will need to know. For 
example, each person has an inheritance tax 
allowance up to £325,000 with anything over 
the threshold being charged at 40%. So, if an 
estate was valued at £400,000, only £75,000 
of that would be taxed. Since the majority of 
people won’t leave an estate over this 
amount, most feel they don’t need to know 
about inheritance tax. However, actively 
considering it and your future can help you 
to avoid any nasty surprises later on.
Helpful for Businesses
There are different types of taxes which can be hard to keep up with especially if you own a business. Tax 
planning is important for both small and large businesses because it can help them to achieve their 
business goals. When you have a tax plan as the owner of a business, you can lower the amount of 
taxable income, gain more control of when taxes are paid and also reduce the rate of tax. Depending on 
the type of business you have, you can find many different benefits. 
Short-range Planning. It means that planning thought of and 
executed at the end of the income year to reduce taxable income in 
a legal way. Suppose, at the end of the year, an assessee finds his 
taxes have been too high in comparison with last year and he tends 
Methods of Tax to reduce it. Now, he may do that, to a great extent by making proper arrangements to get the maximum tax rebate. It does not 
involve a long-term commitment, yet results in substantial savings 
in tax.
Planning Long-range Planning. A planning that chalked out at the beginning of the income year to be followed by the year. This planning will 
not pay off immediately, but likely to help in the long run.
Permissive tax Planning. This is a planning of taking advantage of 
different incentives and tax deductions, planning for availing 
different tax concessions.
Purposive Tax Planning. It means making plans with a specific 
purpose to ensure availability of maximum benefits to the assessee 
through correct selection of investments, making a suitable 
programme for replacement of assets, varying residential status and 
diversifying business activities and income.
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Chyelesmore, Coventry, CV3 5GU