Commentary

B2.304 The importance of the distinction between capital and revenue expenditure

Business tax
Business tax | Commentary

B2.304 The importance of the distinction between capital and revenue expenditure

Business tax | Commentary

Division B2.3A     Trading expenses—capital vs revenue

For updates affecting this Division please see Part B0 Updates

Distinguishing between capital and revenue expenditure

B2.304 The importance of the distinction between capital and revenue expenditure

Statutory provisions are in place which prohibit a deduction for items of a capital nature in calculating the profits of a trade1. The disallowance of capital expenditure is the reason why depreciation may not be claimed as a deductible expense for tax purposes, for example, despite being deducted for accounting purposes, as it is merely the spreading of capital expenditure at a rate determined by accounting policies.

Revenue expenses are generally allowable, unless there are specific rules which are either set out in statue or

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