A: The HMRC guidance on the claiming of tax relief in respect of expenditure on computer software and website costs is fragmented. It should also be noted that the treatment might differ depending on whether the claimant is a company or an unincorporated business, as the latter does not have an equivalent to the intangible assets regime.
The costs of website development and shopping portals, whether paid to third-parties or incurred in-house, will often be accounted for by companies within the intangible assets regime, provided they are created or acquired from a third-party on or after 1 April 2002. In such circumstances, tax relief will follow the accounting treatment, which will lead to the amortisation or impairment of the asset being deductible for Corporation Tax purposes.
However, treating such expenditure as part of the server or computer on which it is hosted, and hence within the capital allowances regime, might often be advantageous to the business. An election under Section 815 CTA 2009 enables a company to preserve the benefit of capital allowances on expenditure on computer software and website development fees, even when the costs have otherwise been accounted for under the intangibles regime.
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