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Use the Capitalised revenue template where expenditure that is revenue in nature for tax has been capitalised in the accounts. Because the amount has been capitalised rather than expensed, it needs to be relieved for tax separately. The template gives tax relief for the revenue expenditure, adds back the depreciation charged on it, and deals with any disposal.

Table of contents 

When should I use this template?

Use it where the accounts capitalise expenditure that would ordinarily be an allowable revenue deduction — for example certain repairs, or costs capitalised as part of a larger project. Rather than relieving the amount slowly through depreciation (which is disallowable), the template allows the revenue amount for tax.

Before you start

A business type must be selected in the Business type section of the Return information template. If none is selected, the template shows a warning and cannot calculate.

Qualifying items are pulled in from the Total fixed asset additions template, so mark the relevant additions with the capitalised revenue tax treatment there first.

Working through each item

For each capitalised revenue item, the template tracks the acquisition date, description, cost, book value brought forward, additions, disposals, depreciation, other movements, and book value carried forward. Two controls determine the depreciation added back:

  • Depreciation method — choose Straight line or a percentage (reducing balance) basis.
  • Years / percentage — if you chose straight line, enter the number of years; if you chose the percentage basis, enter the percentage rate. Silverfin uses this to calculate the depreciation charged on the item.

The depreciation charged in the accounts is added back (it is not an allowable deduction), and the underlying revenue expenditure is relieved for tax instead. Where an item is disposed of, the template deals with the disposal and reconciles the figures back to the Tangible fixed asset disposals schedule.

What flows through to the rest of Corporation Tax?

The revenue amount relieved, and the depreciation added back, feed the adjustment to profit for the relevant business type, so the correct net deduction is given in the tax computation.

Frequently asked questions

Why give relief separately rather than through depreciation?

Depreciation is not an allowable deduction. Where revenue expenditure has been capitalised, the revenue amount is instead relieved directly, and the depreciation on it is added back.

What do the Depreciation method and Years / percentage fields do?

They tell Silverfin how the item is depreciated, so it can add back the correct depreciation — enter the number of years for straight line, or the rate for the percentage basis.

Where do the items come from?

From Total fixed asset additions, where they are marked with the capitalised revenue tax treatment.

This article relates to the Capitalised revenue template in the UK Corporation Tax workflow. It is provided as guidance and does not constitute tax advice.