Website design & build

Conditions

• Ongoing revenue costs of a website are allowable in full in the period they are incurred. These include: domain name registration and annual renewal; web hosting fees; monthly or annual subscriptions to website platforms (Squarespace, Shopify, Wix, etc.); fees paid for routine maintenance and minor updates; content management costs; plugin and extension subscriptions; and SEO and analytics tools. GOV.UK's self-employed expenses guidance explicitly lists 'website costs' as allowable (marketing-entertainment-subscriptions, updated 2024).
• The original cost of building a website is a different matter. HMRC's position in BIM35815 is that the costs of bringing into existence an asset or advantage of enduring benefit are capital, not revenue. A newly built website that is intended to serve the business for a number of years creates such an asset, and its initial cost is therefore capital in principle. HMRC confirmed this in guidance citing the case Strick v Regent Oil Co Ltd: calling a cost 'marketing' or 'advertising' does not change its nature — the substance of what was acquired (an enduring asset) determines the classification.
• Reasoning through the capital/revenue split in practice: if a business commissions a developer to build a new website from scratch, the build cost is likely capital. If that same business then commissions routine maintenance, content updates, plugin updates and minor design tweaks over the following months, those costs are revenue. A major rebuild or overhaul — for example, migrating to a new platform, significantly restructuring the site or a comprehensive redesign — is closer to a new capital asset, particularly where the result is expected to endure for several years. Incremental ongoing improvements stay revenue.
• For limited companies, the intangible assets regime (Corporation Tax Act 2009 Part 8) typically applies to website build costs that have been capitalised in the accounts. A website is an intangible fixed asset (effectively a computer program or similar). Relief is given in line with the amortisation charged in the company's accounts — so if the company amortises the website over three years, it deducts one third of the cost each year for corporation tax. This gives systematic relief on the capitalised cost over the website's useful economic life.
• For sole traders and partnerships, the position on capitalised website costs is less favourable. There is no intangible assets regime for unincorporated businesses. A website is not plant and machinery and therefore does not qualify for capital allowances. If a sole trader's website build is treated as capital, the relief route is limited; in practice, many sole traders and their advisers treat small-scale build costs as revenue on the basis that business websites typically have short useful lives and are replaced or rebuilt within a few years. HMRC's BIM35815 does not prescribe a specific useful life threshold, and the judgment turns on whether the website genuinely has the expected lifetime of a capital asset.
• Where a business combines a website build with branding, copywriting, photography and launch advertising in a single project, the expenditure should be split into its components and each assessed individually. The content, photography and advertising spend is typically revenue; the build infrastructure may be capital.

Common mistakes

• Treating the full cost of building a new website as a simple marketing expense when the build itself may be capital — particularly for a substantial site expected to last several years.
• Treating a platform subscription (Shopify, Squarespace, Wix) as capital when it is a recurring licence fee and therefore revenue.
• Capitalising the entire project invoice when it bundles together capital build costs and revenue spend such as photography, copy and launch ads — the bundle should be split.
• Sole traders assuming the capital allowances rules apply to a capitalised website — websites are not plant and machinery, so standard capital allowances are not available.

What to keep

• Invoices from the developer or agency, ideally split between build costs, content costs and ongoing maintenance.
• The scope of work document or contract, showing whether the commission was for an initial build or ongoing maintenance.
• For capitalised costs: a note of the expected useful economic life of the website and the basis on which it has been treated as capital.

Real-world example

A limited company spends £8,000 building a new e-commerce website and £150 per month on hosting, maintenance and a Shopify subscription. The £150/month is allowable revenue expenditure each month. The £8,000 build is capitalised as an intangible asset in the accounts and amortised over four years (£2,000 per year); the company deducts £2,000 per year for corporation tax under the intangible assets regime. A sole trader in the same position would face a harder conversation with her accountant about how to secure relief on the £8,000 if it is treated as capital.

Frequently asked

Related allowances