Capital Allowances Act 2001

4 Capital expenditure

(1) In this Act “capital expenditure” and “capital sums” are used in the sense given in this section.

(2) “Capital expenditure” and “capital sums” do not include, in relation to a person incurring the expenditure or paying the sums—

(a) any expenditure or sum that may be deducted in calculating the profits or gains of a trade, profession or vocation or property business carried on by the person, or

(b) any expenditure or sum that may be deducted in calculating the emoluments of an employment or office held by the person.

(3) “Capital expenditure” and “capital sums” do not include, in relation to a recipient of the expenditure or sums—

(a) any amounts that are to be added in calculating the profits or gains of a trade, profession or vocation or property business carried on by the recipient, or

(b) any amounts that are emoluments of an employment or office held by the recipient.

(4) “Capital expenditure” and “capital sums” do not include, in relation to—

(a) a person incurring the expenditure or paying the sums, or

(b) a recipient of the expenditure or sums,

any expenditure or sum in the case of which a deduction of income tax falls or may fall to be made under section 348 or 349(1) of ICTA (annual payments).

(5) Subsection (4) does not apply to any expenditure or sum in the case of which a deduction of income tax falls or may fall to be so made as a result of section 524(3)(b) of ICTA (receipts from sale of patent rights by person not resident in the UK).