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.