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Paying a hefty tax is like a perforated sack. Filling the sack on the one hand, emptying the sack on the other. 

You are earning just like that, but you are losing everything by paying taxes.

If you are a small business owner or entrepreneur, you must know about tax reduction strategies. If you are smart enough to cut tax costs, you can increase your wealth.

So we will discuss here some of the secret ways of tax reduction that will overwhelm you. 

Whether you are a small business owner or a big one, our tax reduction ideas apply to everyone. 

If you are new to the business or want to start a business, you must know the following things:

  • What is income tax?
  • How to reduce it?
So here we will shed some light on what income tax is. Since it is off-topic. However, we will discuss in detail about the way to deduct income tax. Next, put a summary discussion at the end.

What is income tax?

We all know that income tax is basically a portion of our earnings to be paid to the government treasury. Tax collection is usually done by the Department of Revenue & Customs.

The first tax collection was done by the then Prime Minister William Pitt in 1799. There were several reasons behind the introduction of income tax. One of the main reasons was to pay for the Napoleonic War. 

 Ways to reduce a hefty amount of income tax

Borrowing money from an investment lender

Investment is the main driving force of the business. However, if you want to pay a low-income tax, you need to borrow money from an institution. Many of us don't know how to evade income tax. Due to which they have to pay a large amount of money every year. So here we will show you how to pay less income tax. As a result, you will be able to make a good return on your investment. You will have to pay the remaining amount after paying interest on the profit earned from the money you have invested. 

Suppose, you want to start a grocery business. In that business, you need £10,000 of capital. But you have only £3,000 at your hand. So the remaining £7,000 you have to take a loan from a lender. Eventually, you took out a loan and started a business. You will have to pay income tax on what remains after you pay interest on the loan with the dividends you have earned. For example, you got £2,000 in profits of the money you invested. Now out of this £2,000, you have to pay the interest to the lending institution who lent you £7,000. Let's say your interest is £5,00. So you paid £5,00 to the lender. Now the outstanding balance of £15,00 is your net income. Now you have to pay income tax on this money.  

Conversely, if you invest your own money in the business, you will have to pay income tax on all gross profits. For example, you have invested £10,000 of your own and made a profit of £2,000. So your total income is £2,000 now. Therefore, your income tax will be determined on this £2,000 GBP.

A direct tax on an individual's income. In general, individuals can earn income without paying tax up to a threshold, with subsequent income giving rise to tax liabilities, usually at increasing rates as income increases (progressive taxation).

Then from the above discussion, it is understood that if you invest personal money, you have to pay more income tax on it. On the other hand, if you invest borrowed money in your business, the income tax rate will go down. This is how big businesses evade their income tax. Similarly, if you want, you will be able to evade income tax in your personal business. As a whole, you need to do a comparative review before investing in any business. Then you will be able to make more profit from your business. Otherwise, the impact of the loss will be greater than the gain.


Finally, it can be said that the prerequisite for starting a business is to have a good idea about financing. Because the described income tax rebate strategy is a clear result of financial literacy. These two words (finance literacy) either will help you to be rich or give you a clear idea of ​​how to manage your money.