OT21735 | Energy Profits Levy: Meaning of capital expenditure

Capital expenditure takes its ordinary meaning for tax purposes. Details of how HMRC interprets capital expenditure can be found in the Business Income Manual at BIM35000 onwards.

Example

Company X incurs £5 million of qualifying capital expenditure on 1 October 2023. Company X generates £1.45m (29% of £5 million) of additional expenditure and can deduct that £1.45 million from profits chargeable to the levy.