Turnover vs Capital Introduced: What Counts as Trading Income

Turnover on your Corporation Tax return only counts money your company earned from trading — sales, fees, or other business income. Money that came into the company from somewhere else, like a loan from a director or funds a family member put in to help you get started, is not turnover and should never be added to it.

What counts as turnover

Turnover (Box 145 on the CT600, and the top line of your Profit & Loss account) is the value of goods sold or services provided during the accounting period. It only includes income the company earned.

It does not include:

• Money a director lends to the company
• Money a shareholder puts in as share capital
• Gifts or loans from family/friends used to fund the business
• Loans from a bank
• Grants (these are usually "other income", not turnover)

If any of these have been added into your turnover figure, your Profit & Loss account will overstate both profit and the Corporation Tax due — because TinyTax calculates tax on trading profit, and money that was never a trading receipt is being taxed as if it were.

Where money from family or a director actually belongs

If a parent, friend, or director puts money into the company to help fund it, that money goes on the balance sheet, not the P&L:

• As a loan — recorded as a creditor (the company owes it back). This shows up as a director's loan or "other creditor" balance, not as income.
• As share capital — recorded as called-up share capital, if it was invested in exchange for shares.

Neither of these is trading income, so neither affects turnover, profit, or Corporation Tax in the period it's introduced.

How to fix it if you've already included it in turnover

If you're still working on your submission:

1. Go back into the Profit & Loss section of your return.
2. Remove the amount that came from the gift/loan from your turnover figure — turnover should reflect trading income only.
3. Add the amount to your balance sheet as either a director's loan/creditor or share capital, depending on how it was actually given.
4. Recalculate — your profit and Corporation Tax figures will update automatically.

Common Questions

Does this money get taxed at all?

No — money introduced as a loan or share capital is not income and is never taxed. It's simply funding the company, the same as a bank loan would be.

What if I've already submitted my return with this included?

Contact TinyTax support with your company name and the amount involved, and we'll help you work out whether an amendment is needed.

Will this change the amount of tax I owe?

Very likely yes, if the figure was substantial — because your true trading profit (and the tax on it) will usually be lower once the non-trading funds are removed from turnover.