Generally, if you own the equipment and software to host your own website, the equipment and software would be capital in nature. However, in the opinion of many experts, a website can be considered a fixed business asset. If you answered yes, congratulations, your website is an asset and you can capitalize on the cost. The creation of an entirely new website or the creation of significant new functionality for that website will be included in capital expenditures.
Typically, the cost incurred for creating, designing, developing and programming a website will be treated as a capital asset. It's also the time when the company can purchase all the hardware needed to support the website. These purchases will follow existing capitalization policies, will be included in the balance sheet and amortized. Websites that provide general information about a company are not classified as fixed assets.
Treating your website as a fixed asset means that the cost is capitalized on the balance and amortized over several years. Typically, costs incurred during the planning and research phase of website development are spent and not capitalized. To determine whether website design is a capital expense or a revenue expense, you need to be clear about the terms. Capital allocations vary from year to year depending on the Chancellor's budget; therefore, the amount of your website creation costs that are deducted from your taxable profits depends on the year.
Once your website launches, ongoing costs for hosting, maintenance, and product upgrades cannot be capitalized as a fixed asset.