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Most websites these days offer customers a method of ordering goods or services, communicating with their business and finding out detailed information on products or services. All of these are clearly functions and so HMRC now accept that certain website costs will qualify for capital allowances as ‘plant and machinery’.

Typically the expenditure which falls into this category as ‘plant and machinery’ is as a follows:

  • Purchase of a domain name

  • Hardware relating to the functionality of the website

  • Operating software relating to the functionality of the website

Because this form of expenditure is treated as plant and machinery, capital allowances can be claimed as part of the annual investment allowance (AIA for short).  This means a tax deduction of up to £200,000 can be claimed for the financial year in which you incurred the expense.

Development costs for a replacement website for your business (even with the same domain name) may also be treated as expenditure qualifying for capital allowances.

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