Website redesign and domain costs for my small business — allowable expenses or capital?

The question is not whether the whole £2,400 is one item, but what each part of the work does. For a sole trader, an allowable expense is generally a revenue cost wholly and exclusively for the trade, while capital expenditure creates or improves an enduring asset. A redesign that mainly refreshes the look, updates menus and opening hours, fixes broken pages and makes the same site work better is usually revenue, even if the bill is not small. The size of the invoice alone does not make it capital.

Adding online ordering and a small shop section is different. That creates a new function your business did not have before, and a new way for customers to buy from you, so that part is much more likely to be capital. If the designer can split the quote, ask for separate lines for the visual refresh, the ordering function, the shop function, content work and any training. That split is what lets you treat each part correctly, rather than guessing about a single £2,400 total.

For the capital part, do not deduct it as an ordinary expense. Capital costs are handled separately, and whether any capital allowances are available depends on the nature of the asset and the rules in force when you incur the cost, so keep the invoice and a note of what was built. Software and website development does not automatically qualify in the same way as plant and machinery, which is why a clear description matters. If you use the cash basis, also check how capital expenditure is treated under that basis before you file.

Your domain and hosting are simpler on the facts you describe. An annual renewal of the same domain for £15 and annual hosting for £180 are recurring running costs, and are normally allowable in the year you pay them, subject to the usual wholly and exclusively test. The position changes if you buy a premium domain at a large one-off price, or pay several years upfront: the premium may be capital, and a multi-year payment may need to be spread over the period it covers.

Keep the designer's proposal, the split invoice, proof of payment, the launch date and a note explaining why you treated each part as revenue or capital. That file will make your return easier and will answer most questions if HMRC asks later.