Tax planning is a term increasingly used by those of us wanting to make the most of our finances, but sometimes its full meaning is not clear.

In a nutshell, tax planning is a strategy which focuses on managing your finances in order to minimize, delay or avoid taxes. This can be achieved by making the most of the various tax-law provisions, tax deductions and tax credits and other legal mechanisms available to keep your taxes as low as possible.

There is a close relationship between the concepts of financial planning and tax planning. The former relates to the strategy of managing your finances in order to achieve your short- and long-term financial goals. Tax planning is an important component of a wider financial plan and can be a key part of reducing your expenses to help you to achieve financial success.