Profit & Loss Calculator

A Profit and Loss (P&L) statement, also called an income statement, summarises revenue and expenses over a specific period to show whether the business made a profit or loss. The structure follows a cascading format: Revenue (or turnover) minus Cost of Goods Sold (COGS) equals Gross Profit. COGS includes all direct costs of delivering your product or service—materials, direct labour, manufacturing overheads, and freight-in.

Gross Profit minus operating expenses (overheads) equals Operating Profit (EBIT). Overheads cover rent, utilities, salaries of non-production staff, marketing, insurance, depreciation, professional fees, and administrative costs. Operating Profit minus interest and tax equals Net Profit—the bottom line. Each level reveals different aspects of performance: gross margin shows production efficiency, operating margin shows management effectiveness, and net margin shows overall profitability after all obligations.

Key ratios derived from the P&L include: Gross margin = Gross profit ÷ Revenue × 100; Net margin = Net profit ÷ Revenue × 100; and the Overheads ratio = Total overheads ÷ Revenue × 100. Comparing these ratios month-on-month and against industry benchmarks identifies trends. A rising gross margin but falling net margin, for example, indicates overhead costs are growing faster than revenue—a common scaling problem. UK limited companies must file accounts including a P&L with Companies House annually.

What is a P&L statement? Summary of revenue, costs and profit over a period (month, quarter, year). UK SME format: Revenue (sales) − Cost of Goods Sold (COGS) = Gross Profit; less Operating Expenses = Operating Profit; less Interest and Tax = Net Profit. Sample: £200k revenue − £80k COGS = £120k gross (60% gross margin); − £80k overheads = £40k operating profit (20% margin); − £8k tax = £32k net (16% net margin). Standard UK company accounts use P&L (also called Income Statement).

UK Corporation Tax on profit 2026. Small Profits Rate 19%: applies to companies with profits under £50,000. Main Rate 25%: profits over £250,000. Marginal Relief: £50k-£250k profits taxed between 19-25% on sliding scale. Sample £75k profit: tax £15,725 (effective 21%). Sample £150k profit: tax £34,225 (effective 22.8%). Sample £300k profit: tax £75,000 (flat 25%). Many small UK businesses fall within Marginal Relief range — careful planning saves £1,000s.

UK industry standard margins. Supermarket retail: 25-35% gross; 2-4% net. Restaurants: 60-70% gross; 5-10% net. Pubs: 70-75% gross on beer; 8-12% net. Clothing retail: 50-60% gross; 5-12% net. Tech/SaaS: 70-90% gross; 15-25% net. Consultancy: 50-75% gross; 15-30% net. Manufacturing: 25-40% gross; 5-15% net. Construction: 15-25% gross; 2-5% net (typically thin margins). Compare YOUR margins against industry benchmark — significant deviation suggests pricing or cost issue.

Gross vs operating vs net profit. Gross profit = Revenue − Direct costs (COGS). Shows pricing power and product economics. Operating profit (EBIT) = Gross − overheads (rent, salaries, marketing). Shows operational efficiency. Net profit = After interest and tax. Shows ultimate shareholder return. Track all three. Gross dropping: pricing issue or supplier cost rise. Operating dropping: overheads bloat. Net dropping (other two stable): tax/interest impact (rare). EBITDA: Earnings Before Interest, Tax, Depreciation, Amortisation — used for valuation and removing non-cash items.

P&L vs Cash Flow — different concepts. P&L: accrual basis — revenue when EARNED (e.g. invoice sent), costs when INCURRED. Cash flow: actual money in/out. Common scenario: profitable P&L but cash crisis (customers owe £150k while supplier bill is due tomorrow). UK SME failures: 80% due to cash flow, not profitability (Companies House data). Track BOTH. P&L for tax and shareholder reporting; cash flow forecast (13-week rolling) for survival planning.