2 REVENUE & CAPITAL WORK

Revenue

All revenue work is LA liability and the funding is normally delegated through the school’s budget. Such work does not attract grant and schools should arrange such work and payment in accordance with their LA’s guidelines, without reference to the DBE office. Any work under £2,000 is classed as revenue work. VAT is reclaimed by the LA for revenue expenditure.

 

Capital Work

The definition of capital work is deliberately vague (see below), enabling governing bodies in many smaller projects to decide whether they wish to class work as capital and obtain 90% grant, or as revenue and fund it entirely from their school budget. Since governing bodies may use money from their delegated budget towards their 10% grant aidable / 100% non-grant aidable payment, it is often beneficial, where possible, to class work as capital when capital funds are available.  All capital expenditure requires the approval of the DBE.

 

VAT cannot be reclaimed by governors on capital expenditure.

 

The definition of capital expenditure is expenditure which falls to be capitalised in accordance with proper accounting practices, or is prescribed by the Secretary of State by regulation (who may similarly class other expenditure as not being capital expenditure)

‘Proper accounting practices’ refer to practices which are regarded as proper accounting practices by appropriate bodies.

No work costing less than £2,000 can be considered as capital work.

Non-capital expenditure is termed ‘revenue expenditure’.

 

Examples

  • Patching or mending small areas of a roof would normally be considered as revenue work and be paid from the delegated budget, because this would be regarded as normal repair and maintenance work. If the whole roof, or a substantial part of a large roof, needed to be replaced, then this would normally be regarded as a capital item.
  • If a boiler unexpectedly broke down and required a new part which cost £1,800. This could have been regarded as either revenue (because it is repair and maintenance) or capital. The cost, however, dictates that it must be revenue because it is less than £2,000.
  • Small repairs to the playground (filling individual potholes etc.) would normally be revenue work and be paid from the delegated budget, because this would be regarded as normal repair and maintenance work. If the whole of the playground needed to be resurfaced, then this would normally be regarded as a capital item.
  • Painting is always considered as revenue work and should be paid from the delegated budget, because this is regarded as normal repair and maintenance work. However, if the work is refurbishment or restoration, it can be considered as a capital item. Governors are advised whenever undertaking a major repainting project to consider making it a refurbishment.
  • Replacing a few damaged chairs or desks would be regarded as a revenue cost because it is normal wear and tear. If, however, as part of a refurbishment of a whole classroom, all of the furniture is to be replaced then it can be included as part of the capital project.
Page last updated: Thursday 10th October 2019 12:18 PM
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