Carver v. Duncan; Bosanquet v. Allen, [1985] BTC 248 (HL)

Although a settlor may provide that capital expenses shall or may be paid out of income, the settlor cannot alter the capital nature of those expenses. "Similarly, a settlor cannot alter the nature of an income expense by authorizing or directing the trustees to pay that expense out of capital."

"[E]xpenditure incurred for the benefit of the whole estate is a capital expense." Insurance policy premiums were paid "for the benefit of the whole of their respective trust funds because the capital of the trust will be augmented by the policy moneys which will be received if and when the policies mature", and accordingly were capital expenditures. Similarly, annual fees paid "to a firm of investment advisers to keep under review and to advise changes in investments comprised in the trust fund" were "incurred for the benefit of the estate as a whole because the advice of the investment advisers will affect the future value of the capital of the trust fund and the future level of income arising from that capital", and accordingly were capital expenditures.