Free profit and loss template
A profit and loss account runs from turnover down to net profit: turnover minus cost of sales gives gross profit, minus overheads gives operating profit, and minus interest and tax gives net profit after tax. It measures profit over a period, not the cash in your account. Download the free template below with a this-year and last-year column, or copy the structure; no email required.
Quick Reference
Direct Answer
A profit and loss account (income statement) summarises income and costs over a period. It runs: turnover, minus cost of sales = gross profit; minus operating expenses = operating profit; minus interest and finance costs = profit before tax; minus corporation tax = net profit after tax. It measures profit as earned and incurred, not cash as it moves.
Summary
This page provides a free downloadable UK profit and loss template (CSV) with this-year and last-year columns, plus a worked example and guidance on the three profit lines a lender reads: gross profit (turnover minus cost of sales, giving the trading margin), operating profit (before interest and tax, the basis for DSCR and serviceability), and net profit after tax. It explains that a P&L records profit not cash, and that rising turnover with a falling gross margin signals pricing or cost pressure rather than growth.
This Page Covers
UK profit and loss template: structure from turnover to net profit, a worked example, gross vs operating vs net profit, gross margin, and how a lender reads it
Not Covered Here
Cash timing (see /templates/cash-flow-forecast-template/), what the business owns and owes (see /templates/balance-sheet-template/), debt serviceability (see /calculator/dscr-calculator/)
Download the template
The template carries a this-year and last-year column, because the trend is what a lender reads first. Open the CSV in Excel, Google Sheets or Numbers.
Turnover (total sales) Cost of sales (direct costs of what you sold) = Gross profit Operating expenses Wages and salaries Rent and business rates Utilities, insurance Marketing and advertising Office, admin, professional fees Depreciation = Operating profit (gross profit minus expenses) Interest and finance costs = Profit before tax Corporation tax = Net profit after tax
Worked example
A trade business with £600,000 turnover, shown with the prior year alongside so the trend is visible.
| Line | This year | Last year |
|---|---|---|
| Turnover | 600,000 | 520,000 |
| Cost of sales | 360,000 | 300,000 |
| Gross profit | 240,000 | 220,000 |
| Operating expenses | 180,000 | 160,000 |
| Operating profit | 60,000 | 60,000 |
| Interest and finance costs | 12,000 | 9,000 |
| Profit before tax | 48,000 | 51,000 |
| Net profit after tax | 36,000 | 39,000 |
Source: FundBiz profit and loss worked example, illustrative figures
Turnover grew 15% but gross margin fell from 42% to 40% and finance costs rose, so operating profit was flat and net profit fell. The headline growth hides margin and interest pressure, which is exactly what the trend column reveals.
View as plain-text Markdown
### Profit and loss, worked example (£) | Line | This year | Last year | | --- | --- | --- | | Turnover | 600,000 | 520,000 | | Cost of sales | 360,000 | 300,000 | | Gross profit | 240,000 | 220,000 | | Operating expenses | 180,000 | 160,000 | | Operating profit | 60,000 | 60,000 | | Interest and finance costs | 12,000 | 9,000 | | Profit before tax | 48,000 | 51,000 | | Net profit after tax | 36,000 | 39,000 | Source: FundBiz profit and loss worked example, illustrative figures Turnover grew 15% but gross margin fell from 42% to 40% and finance costs rose, so operating profit was flat and net profit fell. The headline growth hides margin and interest pressure, which is exactly what the trend column reveals.
The three profit lines, and which one matters when
- Gross profit tells you whether the core trade works. Gross margin = gross profit / turnover. Watch it year on year.
- Operating profit is what a lender uses to judge serviceability. It is the basis for EBITDA and the DSCR an underwriter runs.
- Net profit is what the company keeps after interest and tax, and what builds reserves on the balance sheet.
“Owner-managed P&Ls often understate real profit, because owners run personal costs and above-market salaries through the business to manage tax. An underwriter adds those back to get normalised EBITDA, which is usually higher than the net profit line. If you are applying for finance, prepare that add-back schedule yourself: it is the difference between the profit you report and the profit the business actually makes, and it is often the difference between a decline and an approval.”
The three statements together
A profit and loss account is one of three views a lender wants, and they answer different questions. The cash flow forecast shows when cash moves; the balance sheet shows what the business owns and owes on a date. A strong P&L with a weak cash position is common and fundable, but only if you can show the cash side too.
FAQs
What is a profit and loss account?
A profit and loss account (also called an income statement) summarises income and costs over a period, usually a financial year, to show whether the business made a profit or a loss. It runs from turnover down through cost of sales to gross profit, then subtracts overheads to reach operating profit, and finally deducts finance costs and tax to reach net profit.
What is the difference between gross profit and net profit?
Gross profit is turnover minus the direct cost of what you sold (cost of sales); it measures the margin on your core trading. Net profit is what remains after every other cost, overheads, interest and tax, has been taken off. A business can have a healthy gross profit and still make a net loss if overheads or finance costs are too high.
What is operating profit and why does a lender care?
Operating profit is gross profit minus operating expenses, before interest and tax. It is the profit the business makes from trading itself, and it is the figure a lender uses to judge whether you can service a loan. It is the starting point for EBITDA and for the debt-service coverage ratio (DSCR) that underwriters run.
How do I calculate gross profit margin?
Gross profit margin = gross profit divided by turnover, expressed as a percentage. If turnover is £500,000 and gross profit is £200,000, the margin is 40%. Tracking it year on year matters more than the single figure: rising turnover with a falling margin usually signals pricing pressure or rising input costs, not healthy growth.
Does a profit and loss account show my cash position?
No. A profit and loss account records income when earned and costs when incurred, not when cash moves, so a profitable P&L can sit alongside an empty bank account if customers pay slowly. For the timing of cash, use a cash flow forecast; for what the business owns and owes on a given date, use a balance sheet.
What counts as cost of sales?
Cost of sales is the direct cost of producing or buying what you sold in the period: raw materials, stock bought for resale, and direct labour tied to production. It excludes general overheads like rent, admin salaries and marketing, which sit below gross profit as operating expenses. Getting this split right is what makes the gross margin meaningful.
Ready to raise finance?
If your accounts show the trading profit to support it, tell us what you need the funding for and we surface the panel lenders most likely to approve, with no impact on your credit score to check.
Check your funding options →By Adam Parker. Reviewed by Oliver Mackman. Last reviewed 30 July 2026.