What qualifies as investment expenditure under Corporation Tax Act 2010 section 356JE?

Under section 356JE, investment expenditure means capital expenditure — spending on acquiring, constructing or improving long-term assets rather than day-to-day revenue spending. Additionally, HM Treasury may prescribe other types of expenditure as qualifying investment expenditure through statutory regulations, broadening the definition without requiring a new Act of Parliament.

Can HM Treasury regulations on investment expenditure apply retrospectively?

Yes, when HM Treasury introduces regulations adding new categories of qualifying investment expenditure, those regulations can be backdated to cover expenditure already incurred before the regulations came into force. This means a company could benefit from expenditure already made if the Treasury subsequently decides that type of spending should qualify.

Are there safeguards against retrospective removal of qualifying investment expenditure?

Yes, section 356JE includes an important safeguard. If HM Treasury amends or revokes regulations in a way that removes a type of expenditure from the investment expenditure definition, that change cannot apply retrospectively. Expenditure already incurred under existing qualifying rules retains its investment expenditure status and is unaffected by the revocation.

What drafting flexibility does HM Treasury have when making investment expenditure regulations?

HM Treasury has broad flexibility when drafting regulations under section 356JE. The regulations may make different provision for different purposes, such as treating different industries or asset types differently. They may also include transitional provisions and savings to ensure changes do not create unintended gaps or hardship during changeover periods.

Corporation Tax Act 2010 section 356JE

Meaning of "investment expenditure"

Section 356JE defines what counts as "investment expenditure" for the purposes of the buildings and structures allowances chapter, and grants HM Treasury the power to expand that definition by regulations.

Investment expenditure means capital expenditure, or any other type of expenditure that HM Treasury prescribes by regulations
Treasury regulations can apply retrospectively to expenditure already incurred before the regulations were made
Retrospective effect is not permitted where amending or revoking regulations would remove a category of expenditure from qualifying as investment expenditure
Treasury regulations may make different provision for different purposes and may include transitional provisions and savings

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