Yes, usually, but only part of the bill. Under FRS 102 or IFRS, the build stage of a website (the software, functionality and design) can be capitalised as an intangible asset if the site will bring in future economic benefits. Planning, promotional content, hosting and upkeep go through profit and loss as they happen. Micro-entities on FRS 105 cannot capitalise a website they develop themselves, and HMRC has its own capital or revenue test for tax, so the accounts and the tax return can treat the same invoice differently.
Can website development costs be capitalised?
Yes, the development part can be, provided the site passes the recognition tests and your accounting framework allows it. UK GAAP has no paragraph written specifically about websites. FRS 102 deals with them through Section 18, Intangible Assets other than Goodwill, which splits any internally generated intangible into a research phase and a development phase (FRS 102, September 2024 edition, FRC, paragraph 18.8A). Research spending is always an expense (18.8E). Development spending can become an asset only if the business can show all six things in paragraph 18.8H, including the technical feasibility of finishing it, the intention and ability to use it, how it will generate probable future economic benefits, the resources to complete it, and a reliable measure of what it cost.
Two other rules in Section 18 decide a lot of website invoices. Paragraph 18.8C(d) says advertising and promotional activities are always expensed. And paragraph 18.17 says spending first recognised as an expense cannot be added to an asset later, so the decision needs making when the costs are booked, not after the year end.
When should website costs be capitalised?
Only from the point the project meets the recognition criteria, and only for the stages that create the asset itself. The clearest stage-by-stage rulebook is SIC-32 Intangible Assets: Web Site Costs, the interpretation used by IFRS reporters. It describes planning, application and infrastructure development, graphical design development, content development and, once the site is finished, an operating stage (SIC-32 paragraphs 2 and 3, as adopted in Commission Regulation (EC) No 1126/2008 on legislation.gov.uk). FRS 102 has no equivalent list, but its own split follows the same logic: research is expensed, development may be capitalised.
| Stage | What it covers | Accounting treatment (FRS 102 / IFRS) | Tax treatment (HMRC) |
|---|---|---|---|
| Planning | Feasibility, objectives, specification, comparing options | Expense as incurred. SIC-32 9(a) likens it to research; FRS 102 18.8E expenses research. | Normally a revenue deduction: HMRC says initial research and planning before deciding to proceed is normally allowable as revenue expenditure. |
| Application and infrastructure development | Domain name, software, building the functionality, installing and stress testing | Capitalise if the recognition tests are met (SIC-32 9(b); FRS 102 18.8H, where capitalising is your policy). | Normally capital. HMRC says this capital spend will generally qualify as plant and machinery for capital allowances. Companies: see the intangibles regime below. |
| Graphical design | Designing the look of the pages | Capitalise if the recognition tests are met (SIC-32 9(b)). | Capital to the extent an enduring asset is created. |
| Content development | Writing, buying and uploading content before launch | Capitalise only content that is not promoting your own products and services. Promotional content, such as product photography, is an expense (SIC-32 9(c); FRS 102 18.8C(d)). | Capital to the extent an enduring asset is created. |
| Hosting | Paying a provider to host the site | Expense as the service is received (SIC-32 paragraph 5). Server hardware you own falls under property, plant and equipment instead. | The HMRC pages we read do not single out hosting. Ask your accountant. |
| Operating stage | Maintenance, updates, routine changes after launch | Expense unless the spending itself meets the recognition criteria (SIC-32 9(d)). | Revenue. HMRC treats maintaining or updating a website as revenue expenditure. |
The tax column comes from HMRC’s Capital versus Revenue expenditure toolkit: IT costs (published 1 July 2026) and BIM35815 of the Business Income Manual, both read October 2026.
Can you capitalise website costs under FRS 102?
Yes, if your accounting policy is to capitalise development expenditure and the site meets all six conditions in paragraph 18.8H. Capitalising development costs is a policy choice under FRS 102, but once you adopt it, paragraph 18.8K says it must be applied consistently to all development spending that qualifies. Whatever does not qualify is expensed as incurred.
Once capitalised, the website is amortised over its useful life. FRS 102 treats every intangible asset as having a finite life, and if, in exceptional cases, the life cannot be estimated reliably, it shall not exceed 10 years (paragraphs 18.19 and 18.20). SIC-32 is blunter for IFRS reporters: the best estimate of a website’s useful life should be short (paragraph 10).
Can a micro-entity capitalise website costs?
No, not for a site it develops itself. Under FRS 105, the micro-entities standard (September 2024 edition), paragraph 13.4 says an internally generated intangible shall not be recognised as an asset and all the expenditure goes straight to profit or loss. Paragraph 13.5 also lists research and development and advertising and promotional activities as items that are always expensed. The same section says a micro-entity shall recognise all separately acquired intangible assets (paragraph 13.3), so whether your accountant treats a commissioned site as bought in or as internally generated matters here.
How does IFRS treat website costs?
Through SIC-32, which says a company’s own website is an internally generated intangible asset under IAS 38. The IFRS Foundation’s SIC-32 page summarises the two headline rules: the site can be recognised as an asset only if the entity can demonstrate how it will generate probable future economic benefits, and all spending on a site developed solely or primarily to promote and advertise the entity’s own products and services is expensed. SIC-32 paragraph 8 gives the classic example of a site that passes: one capable of generating revenues, including by letting customers place orders. A brochure site that exists mainly to advertise you is the classic example of one that fails.
Are website costs tax deductible?
Yes, but the build is usually relieved as capital, not deducted as an ordinary expense. HMRC’s position in BIM35815 is that the original cost of creating a website is capital and the regular update costs are likely to be revenue, in the way that building a shop window is capital while changing the display is revenue. HMRC adds that calling the spend “advertising” or “marketing” does not change its nature.
Relief for the capital part comes in one of two ways:
- Capital allowances. HMRC’s toolkit says capital spending on a website will generally qualify as plant and machinery, and its Capital Allowances Manual at CA23410 treats computer software as plant. The toolkit points to the Annual Investment Allowance, which is £1 million and covers most plant and machinery (GOV.UK: Annual Investment Allowance), so for many small businesses the build can be relieved in the year it is paid for.
- The corporate intangibles regime, for companies. Where a company’s website is recognised as an intangible asset in its accounts, the toolkit says it may fall within the corporate intangible assets regime, with tax relief following the amortisation. HMRC confirms at CIRD25145 that under FRS 101, FRS 102, FRS 105 or IAS a capitalised website is an intangible asset, not a tangible one. A company can instead elect to use capital allowances for capital spending on software. Per CIRD25180, the election must be in writing, made within two years of the end of the accounting period in which the spending was incurred, and cannot be revoked.
Which route is better depends on your profits, your year end and how the site is recorded in the accounts. That is a conversation for your accountant, and the guidance here is general information only.
Can you capitalise a website redesign?
Yes, if the redesign is really a new build; no, if it is a refresh of a site that already works. SIC-32 puts maintenance and enhancement after launch in the operating stage, which is expensed unless the spending meets the recognition criteria in its own right (paragraph 9(d)). HMRC draws the same line with its shop window: constructing the window is capital, changing the display is revenue. A rebuild that replaces the old site with new functionality is a fresh development project and is assessed stage by stage again. A new homepage layout or updated prices are running costs.
How do I get an invoice my accountant can actually use?
Ask your web designer to split the invoice into five lines: planning, build, content, hosting and ongoing support. Every rule above depends on knowing which stage a pound was spent on, and a single line reading “website, £1,495” forces your accountant to guess or to expense the lot. A split invoice lets them capitalise the build, expense the planning and promotional content, and treat hosting and support as running costs and leaves a clear record of why each figure was treated the way it was.
We can provide that split on any project we build, and our fixed prices mean the build figure is one known number before work starts: Starter is £495 for up to 5 pages, Business is £1,495 for up to 15 pages, and Premium starts from £3,995. Ask and we will show hosting and support as their own lines, apart from the build, so the capital figure and the running costs stay separate. If you run a practice yourself, our websites for accountants page shows what we build for firms, and our UK website cost guide for 2026 sets out the full price picture, build and running costs together.
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