Turnover and revenue are two of the most frequently used financial terms in UK business and they are often used interchangeably, which can cause real confusion in accounting, tax returns, VAT registration, and Companies House filings. While in many contexts the two terms refer to the same figure, there are important distinctions in how they are used in UK-specific contexts. This comprehensive AccFirm guide clarifies the difference between turnover and revenue, explains how each term is used in different financial and regulatory contexts, and highlights why getting this right matters for UK businesses.
Are Turnover and Revenue the Same Thing?
In UK business usage, “turnover” and “revenue” both broadly refer to the total income generated by a business from its core trading activities during a period before any expenses are deducted. In this sense, they are often synonymous.
However, the precise usage differs depending on context:
- “Turnover” is the term predominantly used in UK company law (Companies Act 2006), UK accounting standards (FRS 102), HMRC tax filings, and Companies House accounts
- “Revenue” is the term used in International Financial Reporting Standards (IFRS) the accounting framework used by listed companies and some large UK businesses
- In everyday UK business conversation, “turnover” almost always means total sales income the headline number at the top of the profit and loss account
Turnover: The UK Legal and Accounting Definition
In the Companies Act 2006, turnover is defined as “the amounts derived from the provision of goods and services falling within the company’s ordinary activities, after deduction of trade discounts and value added tax and any other taxes based on the amounts so derived.”
Key elements of this definition:
- Ordinary activities: Only income from the core business counts as turnover. Exceptional or extraordinary income (such as a gain on sale of a business asset) is generally excluded
- After VAT: Turnover in UK accounts is always shown net of VAT — the VAT collected on behalf of HMRC is never part of the business’s own income
- After trade discounts: Any discounts given to customers at the point of sale are deducted before the revenue is recognised
- From goods and services: Not investment income, not capital receipts, not grants (in most cases)
How Turnover Is Used in Key UK Business Contexts
1. VAT Registration Threshold
HMRC uses “taxable turnover” to determine whether a business must register for VAT. The 2025/26 threshold is £90,000 of taxable turnover in any rolling 12-month period. “Taxable turnover” includes standard-rated, reduced-rated, and zero-rated supplies but excludes exempt supplies, out-of-scope income, and capital asset disposals. Getting this right is essential: exceeding the threshold without registering can result in penalties and interest on all VAT that should have been charged.
2. Companies House and Annual Accounts
Under the Companies Act, turnover is the key top-line figure in a company’s statutory profit and loss account. Companies filing micro-entity accounts (under the £632,000 turnover threshold) have reduced disclosure requirements. Small companies (turnover under £10.2 million) can file abridged accounts. Medium and large companies must provide a full profit and loss account with detailed turnover disclosures.
3. Corporation Tax Return
On the Corporation Tax return (form CT600), the company’s turnover (total income from trading) is one of the key figures HMRC reviews. Trading income, investment income, and capital gains are reported separately.
4. Self Assessment: Self-Employed Turnover
Sole traders and partners report their business turnover on the Self-Employment pages (SA103) of their Self Assessment tax return. This is the total receipts from the business before deducting expenses. AccFirm recommends maintaining detailed records of all income to ensure accurate turnover reporting.
5. Small Business Rate Relief and Grants
Many government grants, rate relief schemes, and funding programmes use annual turnover as an eligibility criterion. For example, the Small Business Grant during Covid-19 used turnover thresholds to determine eligibility.
Turnover vs Revenue in Practice: The Subtle Differences
| Context | Term Used | What It Includes |
| UK company accounts (FRS 102) | Turnover | Core trading income, net of VAT and discounts |
| IFRS accounts (listed companies) | Revenue | Core trading income, may include interest in financial companies |
| VAT registration | Taxable turnover | Standard, reduced, and zero-rated supplies only |
| Corporation Tax return | Total turnover / Trading income | All income from trading activities |
| Self Assessment | Turnover | Total receipts from self-employment |
What Is Not Included in Turnover?
- VAT collected: Turnover is always net of VAT in UK accounts
- Capital receipts: Proceeds from selling a business asset (van, machinery, property) are not turnover they are capital receipts
- Grants and subsidies: Depends on the nature of the grant trading grants are sometimes included, capital grants are not
- Investment income: Dividends received, bank interest, and investment returns are not trading turnover
- Intercompany transactions (consolidated accounts): Intra-group transactions are eliminated when preparing consolidated group accounts
Gross Profit, Net Profit: The Waterfall from Turnover
Understanding where turnover sits in the profit and loss account helps clarify its relationship to other key figures:
- Turnover (Revenue): Total sales income from core trading activities
- Less: Cost of Goods Sold (COGS): Direct costs of producing/providing goods and services
- = Gross Profit: The profit after direct costs
- Less: Operating Expenses: Overheads, wages, rent, marketing, administrative costs
- = EBITDA / Operating Profit: Profit before interest, tax, depreciation
- Less: Depreciation, Amortisation, Interest
- = Profit Before Tax
- Less: Corporation Tax (or Income Tax for individuals)
- = Net Profit (Retained Profit)
Frequently Asked Questions: Turnover vs Revenue
Is turnover the same as profit?
No. Turnover is total sales income before any expenses. Profit is what remains after all expenses (cost of goods, overheads, tax) are deducted from turnover. A business can have high turnover but very low (or negative) profit if costs are high.
What is a “good” turnover for a UK small business?
There is no universal benchmark it depends entirely on the sector, margins, and business model. A consultancy with £200,000 turnover may generate higher profits than a manufacturer with £2 million turnover due to differing cost structures.
Does turnover include VAT?
No. In UK accounts, turnover is always stated net of VAT. VAT collected from customers is held on behalf of HMRC and is not the business’s income.
How is turnover different from cash received?
Turnover is recognised when the supply is made (under accruals accounting) not when cash is received. A business that invoices £50,000 in March but receives payment in April records £50,000 of turnover in March. Cash received and turnover only match on cash-basis accounting, available to some small businesses and sole traders.