Business & Corporate · Section 113 · Tax Year 2026-2027
Minimum Tax on Turnover Calculator
Section 113 puts a floor under your tax bill: if normal tax is lower than a percentage of turnover, you pay the turnover figure — even in a loss year.
Step by step
How the floor works
Work out normal tax first
On your taxable income, using the business or corporate rates.
Apply the rate to turnover
Gross receipts × the rate for your sector.
Compare the two
Whichever is higher is your liability.
Watch the loss case
With no profit there is no normal tax — but turnover tax still applies.
Reading the result
A floor, not an extra charge
Minimum tax is not added to your normal tax. It replaces it when the normal computation falls below the floor. You pay the higher of the two, not both, and reading it as an additional levy overstates the bill considerably.
Where it bites is a loss-making or thin-margin year: normal tax on a loss is nothing, so the turnover figure becomes the liability. That is the scenario the provision exists for.
Low margin matters more than low profit
A distributor turning over large volumes at a small percentage margin can be caught even in a profitable year, because the tax on a small profit is less than a percentage of a large turnover. High-volume, low-margin businesses should model this routinely rather than treating it as an edge case.
The excess may not be lost
Where minimum tax exceeds normal tax, the difference can in defined circumstances be carried forward and set against normal tax in later years. That turns a bad year's minimum tax into a deferred credit rather than a dead cost — but only if it is tracked. Businesses that do not record it never claim it.
Where this stops
Rates differ by sector and several categories sit outside the provision entirely. Turnover here means gross receipts, not profit. Which rate applies to your activity is the part to confirm before relying on the figure.
FAQs
Minimum tax FAQs
What is minimum tax on turnover?
Section 113 sets a floor under your tax bill. If normal tax computed on your income comes to less than a set percentage of your turnover, you pay the turnover figure instead. The liability is whichever of the two is higher.
Can I owe tax in a loss-making year?
Yes — that is precisely what this provision does. A business with a loss has no normal tax, but minimum tax is charged on turnover regardless of profitability. Thin-margin and high-volume businesses are the ones most often caught by it.
What rate applies to me?
There is a standard rate with several reduced rates for specific sectors — oil marketing, refineries, large distributors, dealers, certain service providers and others sit on lower percentages. The field is editable for that reason; check the rate for your activity in the relevant clause rather than assuming the standard one.
Is minimum tax paid on top of normal tax?
No. It replaces normal tax when it is higher — you pay one figure, not both. The "extra cost" shown above is the difference the floor adds compared with normal tax alone.
Can excess minimum tax be carried forward?
The excess of minimum tax over normal tax has historically been available for carry-forward and adjustment against future years' tax, subject to conditions and a time limit that have been amended more than once. Confirm the position for your tax year with a tax advisor before relying on a carry-forward.
Does turnover mean revenue or profit?
Turnover — gross receipts from sales and services, not profit. That is why the charge can exceed normal tax so easily: it ignores your costs entirely.
Related tools
Need your normal tax figure first?
Work out tax on business income before comparing it to the floor.
Open Business Income Tax Calculator