Capitalised Expenses VS Revenue Expenditure
- These expenses are then depreciated over the useful life of the asset
- These expenses are added to the balance sheet, rather than the profit and loss.
- The ‘super-deduction’ was announced in the 2021-22 budget. A new 130% first-year capital allowance for qualifying plant and machinery assets can be claimed. A 50% first-year allowance for qualifying special rate assets can also be claimed.
- They are usually for plant and machinery such as computers, phones, office equipment. A good rule of thumb is to consider capitalising the expense only if it is over £100
- Capital allowances can be claimed on many capitalised transactions.
- These are short term expenses that are typically to be used or the benefits received within 1 year of purchase.
- They are the running costs of the business and therefore the vast majority of expenses for most businesses will be revenue expenditure.