Tax-adjusted trading profit (UK)
A tax-adjusted trading profit reflects taxable trading income and allowable deductions for the relevant period. Starting from accounting profit, adjustments may be needed for disallowable expenses, non-trading items and tax reliefs such as capital allowances where applicable. The accounting basis, taxpayer, tax year and specific rules matter; cash-basis treatment can differ from accruals. A calculation is not complete until each adjustment is justified.
Worked example
A sole trader’s accounts show profit of £30,000 after a £2,000 private expense. If the entire expense is disallowable and no other adjustments apply, adding it back gives adjusted profit of £32,000 before any other relief.
Common mistake
Assuming accounting profit is automatically the taxable amount, or adding back an expense that was never deducted in arriving at it.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |