Revenue Expenditure

Revenue expenditure in the context of property expenditure is works of a maintenance or repair nature.

Such expenditure is treated in a tax computation as a tax-deductible expense (irrespective of whether it has gone through the company’s profit and loss account, or been capitalised on its balance sheet). It is particularly valuable because tax relief is given for expenditure, which if it were capital would not qualify for relief because it is not plant and machinery (i.e. maintaining and repairing ‘building’ or ‘premises’ assets).

Without expert advice it can be complicated and contentious to agree with HM Revenue whether expenditure qualifies for revenue relief. In the now famous words of one Law Lord “no part of our law of taxation presents such almost insoluble conundrums as the decision whether a receipt or outgoing is capital or income [i.e. revenue] for tax purposes”.

For maintenance and repairs expenditure that is expensed through a company’s profit and loss account the tax deduction will be available in the year the money is spent.

For capitalised or ‘deferred’ revenue expenditure (i.e. maintenance and repairs that have been recorded on the company’s balance sheet) HM Revenue’s published view is that deduction will become available when that capitalised expenditure is depreciated through the company’s profit and loss account. However, we are experienced in successfully helping taxpayers to mitigate this less favourable treatment.