The taxation note explains the tax charge in the profit and loss account by splitting it into current corporation tax and deferred tax.
What this note shows
The note has three lines for the current and prior year: Corporation tax (the tax for the year), Deferred tax (the movement in the deferred tax provision, a timing adjustment for tax that will be payable or recoverable later) and the total, Tax on profit.
FRS 102 Section 1A doesn't require the full tax reconciliation that larger companies give, but a simple breakdown of the charge is common and useful. The note only exists in FRS 102 Section 1A accounts. The deferred tax balance on the balance sheet is covered separately in the Deferred taxation note.
Where the figures come from
| Printed row | Trial balance account |
|---|---|
| Corporation tax | Corporation tax charge |
| Deferred tax | The deferred tax account (the profit and loss deferred tax charge) |
| Tax on profit | The two lines added together |
A debit balance is a charge and prints as a positive figure. A credit, for example a corporation tax repayment from losses carried back or a release of deferred tax, prints in brackets. In the demo, corporation tax of £38,500 and deferred tax of £1,200 give tax on profit of £39,700 (2025: £31,000 + £800 = £31,800).
Completing the note in Tax Optimiser
Open the period, choose View Accounts, then Notes in the Actions menu on the left. Select Taxation and set Show this note in the accounts to Yes.
The editor shows boxes for Corporation Tax and Deferred Tax, but the figures always come from your trial balance. Typing in them does not change the accounts. To change them, correct the trial balance, for example by posting the final corporation tax figure from the CT600 computation, and save again.
Click Save changes to save the note and rebuild the accounts preview.
Wording templates
The Additional note for taxation section prints under the table and has one template:
- Tax losses carried forward – "The company has tax losses of £{{Losses}} available to carry forward against future trading profits." You'll be asked for
{{Losses}}.
How it appears in the accounts
In the demo accounts the note is note 6:
Frequently asked questions
Why can't I change the corporation tax figure in the taxation note?
The figure is read from the Corporation tax charge account in the trial balance, so the note always agrees with the profit and loss account. Post the correct charge to the trial balance and save.
Does the taxation note include a tax reconciliation?
No. Small companies preparing FRS 102 Section 1A accounts don't have to give the reconciliation of the tax charge to profit multiplied by the tax rate. The note shows the split between current and deferred tax.
How do I disclose tax losses carried forward?
Use the Tax losses carried forward template in the Additional note for taxation and enter the amount of the losses.
Why is deferred tax shown in brackets?
The deferred tax account has a credit balance, meaning the provision went down in the year. That reduces the tax charge, so it prints as a credit.
Where to go next
- Guide to the notes to the accounts – how the Notes screen works
- Previous: Operating profit note
- Next: Intangible fixed assets note
- Deferred taxation note