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Yes, in most cases. If you’re a sole trader and your website is there for your business, what you spend on it is usually an allowable business expense. That means it comes off your profit before you pay Income Tax and National Insurance.
How you claim it depends on what the cost is and how you keep your accounts. This guide explains it in plain English. It isn’t tax advice, so if your situation is unusual, check with an accountant or HMRC’s guidance on expenses if you’re self-employed.
What website costs can a sole trader claim?
HMRC’s rule is that a cost has to be “wholly and exclusively” for your business. A website that tells customers what you do, where you work and how to get in touch clearly passes. The usual costs are:
- Hosting, the monthly or yearly fee to keep your site online.
- Your domain name, such as yourbusiness.co.uk, and its renewal.
- Email on your domain, if you pay for it separately.
- Design and build, whether a one-off fee to a designer or the setup cost of a builder like Wix or Squarespace.
- A monthly website plan that covers design, hosting and changes, such as our £47 a month managed website.
- Words and photos made for the site, like a copywriter’s fee or a photographer’s day.
- Plugins, themes and software you pay for to run the site.
- Advertising and SEO, such as Google Ads or paying someone to improve your search rankings.
Running costs: claim them in the year you pay
Hosting, domains, email and monthly website plans are running costs. You claim them in the tax year you pay for them, as part of your allowable expenses on your Self Assessment.
Say a dog groomer in Newtown pays £47 a month for a managed website. That’s £564 over the tax year, and it all goes in as an expense. If they pay Income Tax at the basic rate of 20%, that alone takes about £113 off their Income Tax bill, and their National Insurance goes down a little too.
A one-off website build: it depends on your accounting method
This is where people get confused, but for most sole traders the answer is simple.
If you use the cash basis
The cash basis is now the default for sole traders. You record money when it comes in and goes out. Under the cash basis you can usually deduct a website build in the year you pay for it, the same as any other business cost. If you paid a designer £1,500 in June, that’s £1,500 of expenses in that tax year.
If you use traditional (accruals) accounting
Some sole traders opt out of the cash basis, often on an accountant’s advice. In that case, a website built to last for years may count as a capital cost rather than a running cost. HMRC’s Business Income Manual has guidance on how to treat website costs. Capital costs aren’t claimed as ordinary expenses. Instead you claim capital allowances.
For most small businesses that makes little difference. The Annual Investment Allowance usually lets you claim the full cost in the year you spend it. Your accountant will know which box it goes in.
What you can’t claim
- The personal part of a shared cost. If one hosting account runs your business site and your family blog, only claim the business share.
- Costs from before you started trading, unless they were within the seven years before you started and would have been allowable once you were trading. Those count as if you’d spent them on your first day.
- Any expenses at all, if you use the £1,000 trading allowance. The trading allowance and actual expenses are an either/or. If your costs are more than £1,000, claiming expenses usually works out better.
What about VAT?
If you’re VAT registered, you can usually reclaim the VAT on website costs from VAT-registered suppliers, as long as you have a proper VAT invoice. If you’re not VAT registered, the full amount you paid, including any VAT, is your expense.
What if you’re a limited company?
The ideas are similar, but the company claims the costs against Corporation Tax, not you personally. The rules for capital and running costs work a bit differently, so it’s worth asking your accountant.
Keep the invoices
HMRC can ask to see records for any expense you claim. Keep your invoices for at least five years after the 31 January deadline for that tax year. If you’re a WebHostGB customer, every invoice is in your client area, so you can download a year’s worth at tax time.
The short answer
For a sole trader, a business website is almost always an allowable expense. Monthly costs like hosting, domains and website plans come off your profit in the year you pay them. A one-off build usually does too if you use the cash basis, and through capital allowances if you don’t.
If you’re working out what to spend in the first place, our website cost calculator gives you a realistic range, and our guide on how much a small business website costs in the UK compares the options.