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Treatment of website costs

GemworGemwor FMAAT, AAT Licensed Accountant Posts: 21
Hello,

Situation: Small sole trader has incurred the following website costs:

£18 domain name registration for 2 years
£187 Go Daddy website builder allowing creation and maintenance of website, 2 years

Website is purely for promotional purposes - business and contact information, no ability to make sales etc and there have been no formal "design" costs, the sole trader has done it all themselves

I'm not clear on whether to treat as revenue or capital expenditure. I've looked on GOV.UK and reviewed the Capital vs Revenue Expenditure Toolkit page 15 - it says:

"Application and infrastructure costs, including domain name, hardware and operating software that relates to the functionality of the website should normally be treated as capital expenditure...........A website that will directly generate sales, subscriptions, advertising or other income will normally be regarded as creating an enduring asset and consideration should be given to treating the costs of developing, designing and publishing the website as capital expenditure.......The cost of maintaining or updating a website (in relation to price changes, for example) should be treated as revenue expenditure"

Based on this it would imply that the domain name registration should be capitalised but with regards to the £187 fee, it will be used for advertising which should hopefully generate future revenues but it also contains an unidentifiable element of revenue expenditure (the maintenance of the website) - so it could fall into either category.

I also called the ICAEW helpline and they too were not sure but suggested treating as revenue.

Its such a low value but causing a bit of a headache. Would welcome any views on this.

Thanks in advance :)

Comments

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    Considering the amount involved I would just put it as revenue/advertising costs.
    Gemwor
  • BertieBertie West Midlands Registered Posts: 376
    Revenue.

    If it was an e-shop, capital.
    Gemwor
  • GemworGemwor FMAAT, AAT Licensed Accountant Posts: 21
    Thanks everyone, revenue it is! It seemed so trivial given the value but there was a grey area and I don't like those!

    Thanks for taking the time out of your days to read and reply. Much appreciated.

    Have a great weekend!
    BertieMarieNoelle
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