How Taxable Profit is Calculated

Corporation tax is calculated from the taxable profit. Net profit is adjusted for provisions, tax losses and capital allowances to caculate taxable profit.

Calculating Taxable Profit

Taxable profit is calculated by first adding provisions that do not involve cash transfers such as for depreciation and bad debts plus non-deductible expenses such as enertainment to your pre tax profit. Losses from previous years are brought forward to be set off against the current year's taxable profit.

Capital Allowances

While depreciation is not tax deductible, the cost of fixed assets are subject to capital allowances. Most fixed assets are known as main pool assets and attract the same rates of allowance which are deducted from the taxable profit. Cars are assessed differently from main pool assets tn that they generally attract lower capital allowances.

Marginal Relief

Taxable profit is the basis of the corporation tax charge. In the UK if taxable profit is £300,000 or greater and less than or equal to £1,500,000 a further allowance against tax known as marginal relief applies. To view an example as to how marginal relief works follow the link below.

Figurewizard Forecasts and Bad Debts

Debts that are six months past due are allowable as bad debts to be written of against taxable profit.

The % of sales entered for bad debts in the Figurewizard form represent debts that are assumed will actually go bad in the course of the forecast years and are therefore treated as tax deductible.

The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 Business Planning and Forecasting: What to Look For. Credit Checking - How to Read Micro or Short Form Accounts Amortisation of Arrangement Fees for Long Term Loans BHS Profits Performance 2010 - 2014 BHS profits, liquidity and cash flows 2009 - 2014 How to Calculate a Free Cash Flow Forecast Campari: How to apply for a bank business loan What are Current Liabilities What are Current Assets Late Payers and Cash Flow What is Operating Cash Flow What is Working Capital How to Read a Balance Sheet Business Planning Cash Flow Calculator Short Term Liquidity Business Liquidity Corporation Tax is not Calculated on Net Profit Small Business Corporation Tax Cash Flow Calculator Using Figurewizard - VAT Using Figurewizard - Sales by Month Using Figurewizard - HP or Instalment Plan Budgets Using Figurewizard - How the budgeted cash flow forecast is calculated Using Figurewizard - Fixed Asset Budgets Using Figurewizard - Calculate Purchase of Goods Using Figurewizard - Forecasting Payments to Suppliers Using Figurewizard - How to Forecast Cash Collection Solvency and the Balance Sheet Property in the Balance Sheet Why Equity is a Liability Asset Management and Liquidity Selling Fixed Assets Contracts: Invitation to Treat What is Deferred Income Loss on the Sale of Fixed Assets Calculating Gross Profit Margin Profit and Loss Statement What is Operating Profit What is Net Operating Revenue What is Equity Profit on the Sale of Fixed Assets How Taxable Profit is Calculated What are Operating Overheads Overheads - Provisions Depreciation What is Business Operating Activity What are Fixed Assets