Corporation Tax Act 2009 section 53

Capital expenditure

Section 53 prohibits the deduction of capital expenditure when calculating trading profits for corporation tax purposes.

• When calculating the profits of a trade, no deduction is allowed for items of a capital nature.
• Whether a sum is income or capital is ultimately a question of law, not accountancy — correct accountancy treatment is not decisive.
• Certain statutory exceptions exist elsewhere in the Corporation Tax Acts that do permit capital deductions (for example, expenses connected with patents).
• The term "items of a capital nature" is deliberately left undefined, reflecting the absence of general agreement on what constitutes capital expenditure.