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Definition
Capital expenditure buys or improves long-term assets and is spread over time; revenue expenditure is day-to-day running cost deducted in full when incurred. The distinction changes how spending hits profit and tax.
In plain terms
Buying a machine is capital; oiling it is revenue. One is an asset written down over years (via depreciation and capital allowances); the other is a cost deducted straight away.
Why it matters for your company
Getting the split right matters for both accounts and tax. Miscoding capital spend as revenue overstates costs and understates assets; the reverse defers relief you could take now. It directly affects taxable profit.
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