CT600 Box 155: Gross Profit Explained

Box 155 is where you report your company's gross profit on the CT600. This guide explains what goes in this box and how to calculate the figure correctly.

What is Box 155?

Box 155 on the CT600 is labelled "Gross trading profits" (or "Gross profit").

This box shows your profit before operating expenses - the difference between your sales and your direct costs.

What is Gross Profit?

Gross profit is calculated as:

``` Gross Profit = Turnover - Cost of Sales ```

It's what's left after paying for the goods or services you've sold, but before deducting operating costs like rent, salaries, and utilities.

How to Calculate Box 155

Step 1: Identify Turnover

Start with your total sales revenue:

``` Product sales £400,000 Service income £100,000 Total turnover £500,000 ```

Step 2: Calculate Cost of Sales

Identify direct costs of what you sold:

For product businesses:

Opening stock
Purchases
Less: Closing stock

For service businesses:

Direct labour costs
Materials used in providing services
Subcontractor costs

``` Opening stock £30,000 Purchases £180,000 Less: Closing stock (£25,000) Cost of sales £185,000 ```

Step 3: Calculate Gross Profit

``` Turnover £500,000 Less: Cost of sales (£185,000) Gross profit £315,000 ← Box 155 ```

What's Included in Cost of Sales?

For Trading Companies:

Include	Exclude
Raw materials	Office supplies
Stock purchases	Rent
Direct labour	Admin salaries
Manufacturing costs	Marketing
Import duties	Insurance
Freight on purchases	Depreciation

For Service Companies:

Include	Exclude
Direct staff costs	Admin staff
Materials for client work	Office costs
Subcontractor fees	General overheads
Client-specific expenses	Marketing

Box 155 vs Other Boxes

Understanding the flow:

Box	Name	What It Shows
145	Turnover	Total sales
155	Gross profit	Sales minus cost of sales
165	Trading profits	Gross profit minus expenses

``` Box 145: Turnover £500,000 Less: Cost of sales Box 155: Gross profit £315,000 Less: Expenses Box 165: Trading profit £120,000 ```

Gross Profit Margin

Your gross profit margin shows how profitable your sales are:

``` Gross Margin = (Gross Profit ÷ Turnover) × 100

Example: (£315,000 ÷ £500,000) × 100 = 63% ```

Typical margins vary by industry:

Retail: 25-50%
Services: 50-80%
Manufacturing: 30-40%
Software: 70-90%

Examples

Example 1: Retail Business

Company sells products:

``` Sales revenue £200,000 Opening stock £15,000 Purchases £100,000 Closing stock (£20,000) Cost of sales £95,000 Gross profit £105,000 ```

Box 155: £105,000

Example 2: Consulting Business

Company provides consulting services:

``` Consulting fees £180,000 Contractor costs £40,000 Travel to clients £5,000 Cost of sales £45,000 Gross profit £135,000 ```

Box 155: £135,000

Example 3: Software Company

Company develops and sells software:

``` Software licences £250,000 Hosting costs £25,000 Developer contractors £35,000 Cost of sales £60,000 Gross profit £190,000 ```

Box 155: £190,000

Common Mistakes

1. Including Operating Expenses

Wrong: Including rent, admin salaries in cost of sales Right: Only include direct costs of goods/services sold

2. Missing Stock Adjustments

Wrong: Using purchases only for cost of sales Right: Adjust for opening and closing stock

3. Confusing Gross and Net Profit

Wrong: Entering net trading profit in Box 155 Right: Gross profit is before operating expenses

4. Misclassifying Overheads

Wrong: Putting warehouse rent in cost of sales for retailers Right: Only direct product costs are cost of sales

No Gross Profit (Loss Situation)

If cost of sales exceeds turnover:

``` Turnover £100,000 Cost of sales £120,000 Gross loss (£20,000) ```

In this case:

Box 155 would be £0 or blank
The gross loss would typically flow through to a trading loss

Service vs Product Businesses

The concept applies differently:

Product Business

Clear distinction between cost of sales and expenses
Stock values are significant
Gross margin is a key metric

Pure Service Business

May have minimal cost of sales
Some show all costs as expenses
Gross profit may equal turnover

For a consultant with no direct costs:

Box 145: £100,000 (fees)
Box 155: £100,000 (same - no cost of sales)
Box 165: £60,000 (after expenses)

When Using TinyTax

TinyTax calculates gross profit by:

Importing your trial balance
Identifying turnover accounts
Identifying cost of sales accounts
Calculating gross profit automatically
Populating Box 155 correctly

The mapping ensures the right accounts go to the right boxes.

Need Help?

Getting your gross profit right is essential for accurate Corporation Tax. TinyTax calculates Box 155 automatically from your accounting data.

Start Your CT600 Free →