Income Tax (Trading and Other Income) Act 2005 section 33

Capital expenditure

Section 33 establishes the general rule that capital expenditure cannot be deducted when calculating trading profits for income tax purposes.

• No deduction is allowed for items of a capital nature when calculating trading profits
• Whether a sum is income or capital is ultimately a question of law, not accountancy — accounting treatment is not decisive
• The term "items of a capital nature" is deliberately left undefined, as there is no general agreement on what constitutes capital expenditure
• Certain statutory exceptions exist that allow specific capital items to be deducted, such as expenses connected with patents under section 89