Capital or Revenue

capital or revenueThis is a common area of review applying to a lot of businesses. All true business expenditure is either capital or revenue expenditure.

Revenue expenditure is a cost applicable to the profit and loss account when spent. Sometimes e.g. in the case of insurance being paid for a year in advance this can cross two financial years.

Capital expenditure procures an asset which has benefit for future years. Capital expenditure is split into a) items qualifying for capital allowances whether first year allowance or pool allowance or b) expenditure that can be reclaimed only against capital gains tax on the sale of a business.

Qualifying Capital expenditure goes into the accounts as depreciation over an appropriate number of years but for corporation tax purposes is allowable as capital allowances. Up to £500k (£200k from 1st January 2016) in the current year of qualifying capital expenditure can be claimed as first year allowances at 100% of expenditure for tax purposes saving 20% corporation tax.

Who is this for?

This is a key area for business owners who spend money on assets, properties, change or development. It is very important for business owners who own buildings with integral fixtures and fittings as the various parts of expenditure need to be reviewed to maximize potential capital allowances.

Indicative Fees

Very simple items will be reviewed as part of completing the accounts. More complex situations can be bespoke. There can be 1 off reviews from £150+ vat varying with scope. Complex building issues could be reviewed for a fee based on a % of additional capital allowances physically received from HMRC. Due to the specialist nature of building capital allowances Taxless would work alongside a trusted partner in this area.