website cost or not

Website… a Cost or an Asset?


Your own view doesn’t really matter… but what your accountant thinks does… because your website can be treated as an Asset and not a Cost…

… which means a boost to this year’s Profits… a strengthened Balance Sheet… and an improving credit rating…

Old Rules

For most of you, in the past when you bought or built a new website the cost was written off through the Profit & Loss…

A lucky few who built their own may have had an accountant prepared to use UITF Abstract 29 Wesbite Development Costs (issued in February 2001) to take those costs and put them into the Balance Sheet as a Tangible Asset…

… and a luckier few who paid for a site to be built for them had accountants happy to capitalise website costs as an Intangible Asset

New Rules

For year ends December 2015 & onwards there’s a new set of accounting rules FRS 102 replacing the old rules…

… if you’ve recently bought or are developing a new website for yourself you need to get your accountant to look carefully at how those costs get treated…

Because I see no reason for most of those costs to hurt your bottom line (unless you want them to!)… a bought website can be capitalised as an Intangible Asset… an internally built website can be Tangible or Intangible…

As the ACCA say … FRS 102 leaves it up to you and your accountant to ‘develop a suitable accounting policy’…

The Tax Man

So what does the tax-man make of your website…? well… here’s what they say

“The cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue”

So the Tax Man says the building or buying of your new website can be an Asset… later content & changes can be Costs…

But bear in mind that if you do choose to treat your new website as an Intangible Asset…

… your taxable Profits will go up (by moving costs out of the profit and loss)…

… and in future years they will be lowered by Amortisation (a fancy word the Depreciation of an Intangible Asset)

So… Website… a Cost or an Asset?

Up to you & your accountant really… but I guess that decision will be informed by whether or not you want boosted Profits & Balance Sheet this year?

Either way…

‘Nobody Dies’