Profit Tax for a Small Company: From Accounting Profit to Taxable Profit, Add-Backs, Capital Allowances, Loss Carry-Forwards & Instalments

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Compute Kestrel Joinery's accounting profit from its income statement, total the add-backs and deductions with SUMIFS and reach the adjusted profit that the rest of the tax computation builds on.
• Look up the deductible share of every ledger line in a fictional category table, split each amount into its deductible part and its add-back, and add the total add-back to the accounting profit.
• Run three fictional capital allowance pools for the year: balance, allowance and closing value. Then you swap the depreciation in the accounts for the allowances and reach the taxable profit before losses.
• Keep a five-year loss memo: losses go into a pool, profitable years draw on it up to a fictional cap, and the 2026 taxable profit after losses comes out at the end.
• Tax five fictional companies under an invented two-band rate, compare the effective rate with tax ÷ accounting profit and show why the marginal rate, not the effective rate, prices an extra 10,000 of profit.
• Build Kestrel's instalment calendar under fictional rules: due dates moved off weekends, instalment amounts from the lower of last year's tax and this year's estimate, and the balance with its due date.
• Count the days each fictional instalment was paid late, charge late-payment interest per day, and compute the refund with credit interest when the instalments turn out higher than the final tax.
• Compute the current tax for three years, the tax still payable at each year end after the instalments, and the tax as a share of accounting profit, and chart how far taxable profit lags behind accounting profit.