Disallowed Expenditure - Capital Expenditure

Question 1

Expenditure on, or relating to, capital assets is…

Answer 1

Not allowed in computing the taxable trading profit, but may be allowed for capital gains tax

Question 2

What are the first 3 examples of capital expenditure which is disallowable when calculating taxable trading profit?

Answer 2

• depreciation
• loss on sale of fixed asset
• cost of capital assets included within repairs and maintenance

Question 3

What are the second 3 examples of capital expenditure which is disallowable when calculating taxable trading profit?

Answer 3

• improvements/enhancements
• expenditure required to first bring an asset into a useable state
• capital related expenditure included with legal and professionals fees

Question 4

Repairs (returning an asset to its original condition) and maintenance (e.g redecoration) are…

Answer 4

Allowable costs

Question 5

Repairs using current industry standard materials or technology are

Answer 5

Allowable, even though there is an element of improvement