The starting point for calculating BI values is revenues for the most recently completed twelve month financial period. Most worksheets take a top-down or deductive approach to calculating this value: annual net sales plus other earnings from business operations minus certain non- continuing expenses.

One way to calculate loss revenue from a business interruption is to determine the difference in sales and then subtracting the expenses saved as a result of not having the sales. In other words, determine projected sales, subtract actual sales, and then subtract expenses saved as a result of not having those sales.

HMRC’s general stance is that if the premium was tax deductible, any insurance receipts are taxable. Businesses would have been able to deduct the cost of business interruption insurance premiums as long as the cost was incurred wholly and exclusively for the purposes of the business.

In most situations, if the insurance premiums are allowable deductions from trading profits, the receipts from the policy are taxable as trading income. Where no deduction is allowed, often the receipts are not taxable as revenue.

A gross earnings policy calculation involves subtracting the expenses that stop as a result of an incident from the lost turnover (i.e. revenue).

To determine your net income, you must subtract salaries, utilities, food costs, rent and other expenses. When completing your income tax return, note your net business income on lines 13500 to 14300 of your T1 form.

Find Net Income or Loss Subtract total expenses from total revenue to determine your net income or net loss. If your result is positive, you have net income. If it is negative, you have a net loss. In this example, subtract $10,000 in total expenses from $15,000 in total revenue to get $5,000 in net income.

Lost revenue is equal to the expected growth rate less actual revenue. If actual revenues exceed expected growth rate, then set the figure to zero (0). Example: 1. Town X has $100 in revenue in the base year (the last full year before January 27, 2020).

Generally speaking, moneys that businesses collect from their insurance companies after filing a claim are not considered taxable income – particularly if the amount you receive is $5,000 or less.

When a life insurance policy payout is made in the UK, it’s not taxed. However, although a life insurance payout is not subject to any kind of specific life insurance tax, it could be considered part of your ‘estate’, which is subject to inheritance tax (IHT).

Money you receive as part of an insurance claim or settlement is typically not taxed. The IRS only levies taxes on income, which is money or payment received that results in you having more wealth than you did before.

To ensure you don’t end up under-insured it is critical that the sum insured and the indemnity period are correct. So how can you make sure you calculate your business interruption insurance correctly? With so many unknown factors, risk managers should anticipate the worst possible case scenarios in anticipation of loss.

We know setting up passwords and remembering them can be difficult so to make this tool more accessible we have now made our business calculator login free. To access our calculators simply click on the button below and start using the AXA Business Interruption Calculator today.

Business interruption isn’t strictly necessary for all businesses, nor is it a legal requirement, but it can be a lifeline for businesses that rely on their premises or certain physical assets in order to generate revenue.

A maximum indemnity period is typically set at 12, 24 or 36 months starting from the date of the incident, but when being chosen should always reflect the worst-case scenario – it’s better to be over-cautious than under-insured.

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