AG Consulting UK

In short, gross profit is your revenue without subtracting your manufacturing or production expenses, while net profit is your gross profit minus the cost of all business operations and non-operations. Your net profit is going to be a much more realistic representation of your company's profits.

Net profit represents the amount of income remaining after all expenses—including cost of goods sold, operating expenses, interest, taxes, and depreciation—have been deducted from total revenue. It reflects the company's financial performance and profitability over a specific period. A positive net profit indicates that the business is operating efficiently, while a negative net profit signals losses that may require corrective actions.

A capital allowance is a tax relief that enables businesses to deduct the cost of specific capital assets, such as machinery, equipment, or vehicles, from their taxable profits. This helps reduce the amount of tax a business owes, acknowledging the depreciation of assets over time. Different types of capital allowances include the Annual Investment Allowance (AIA), First-Year Allowance (FYA), and Writing Down Allowance (WDA).

UK income tax bands for the 2024/2025 tax year (which runs from 6 April 2024 to 5 April 2025)

High income and child benefit