Capitalised Expenses VS Revenue Expenditure

Capitalised Expenses 

  • 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. 
  • 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. 

Revenue Expenditure 

  • 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. 

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