pooey8

Hi

I have purchased 2 domain names for use in my business are you aware if the cost of these are tax deductible and if so, under what section should I claim relief.

Any feedback much appreciated

Many Thanks

Paul

stender

Totally mis read your post! please excuse me being a donut!

invincible

Call your accountant or "an accountant". They'll be able to assist you. Without knowing the nature of your business, it's impossible to answer this question properly.

netserve

It sounds like the domains are being used within your business for marketing, ie you're business isn't in buying/selling domains in which case if you've paid less than £500 (thats a figure plucked from thin air as being reasonable) then write the figure off in your profit and loss account under general expenses.

If you've paid more than about £500 then you're looking at something that would have to be considered as an intangible asset to the business and you'd be looking at putting that in your balance sheet and writing it off a little bit each year over what you consider to be its useful life.

The above is the 'accounting' answer, not necessarily the same treatment that you'd use for tax as I can't think what the Inland Revenue would expect you to do with a domain you'd spent say £50K on. If it were expensive they'd probably expect you to treat it as a capital asset and write it off at 25% reducing balance basis per year.

I'd still suggest it's worth asking your accountant.

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lesurf

I have had the same question on this from my accountant, is there any argument that can be used so that a domain can be written off as tax deductible rather than treated as an (intangible) asset.

For example: Say, my business area is IT Consultancy. I have been running my business happily for years trading under an unrelated trading name e.g. LeSurf Consultancy Ltd. To get some extra business I decide I want to buy a generic domain like itconsultancy.co.uk (for say £x,xxx) and redirect this traffic to my web site.

How have other people treated domains in their accounts, and what arguments have they used if they have written them off?

olebean

There is also the question should they be amortilised at all?

lesurf

I don't actually think there is a definitive answer as to whether the purchase of a domain name is tax deductible or not. Moreover, I think if you rang the IR they probably wouldn't know either.

This thread (below) sums up the confusion but at least does go through some relatively solid arguments either way:

Domain Names on Balance Sheet - UK Business Forums

pred

Hi,
obviously if you are a domainer then you buy & sell (some rent).
You will either make or lose money on each domain & as such, these business transactions are the same as if they were loaves of bread etc being bought or sold at a loss or profit. The taxman want's his slice too
However your question i think is if you have layed out cash for domains you will just use. A novel idea lol
I think as one chap mentioned earlier you could treat it like a depreciating asset, like a van etc. But in years to come it may be worth a lot more though. It's a domain, so it's likely.
How about you treat it like shares. I know we 'rent' domains officially, but then we do get a certificate of ownership, certainly for .uk domains.
I'm self-employed & have had losses on shares before & written them off against profits in other areas. My accountant said this was cool & the taxman was happy too.
How about write the purchase off against any profits this time around & if you sell in the future at a profit, you can counter against losses in other areas.
The tax man wil probably see it as a necessary purchase, like marketing.
If you ever sell the business, the domain is one of the cornerstones.
However it starts getting tricky again lol
It's like football clubs , they don't count the players when being valued, in most cases they are the most valuable inventory though.
Unless you're a Charlton fan like me. There, i said it!
Hope there's some ideas for you.
cheers
Pred

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lesurf

Thanks Pred, some useful ideas there to pitch at the accountant.

In my case it's a domain that will be used and is likely to increase in value. I think you might right for to write it off this year as "marketing" and then if I ever sell it take the hit.

I think it would be highly unlikely that I would sell the domain separate from the overall business which as you say is where it begins to get tricky! I think it must then be classed as an intangible asset. I wonder how the accountants dealt with boo.com - they went out of business but the domain has been used (bought?) by others, checked there today and it says "coming soon...."

Did your accountant use any particular section under which to claim relief or was it just put down and argued as "marketing expenses"?

olebean

IMPO

Hehe The problem with players is the valuation method... in some cases the value of players is relative to statistically analysed performance, companies revenue and the players previous or remaining contract...

In the case of domains, they are either a consequence of contractual terms... selling a domain as I suggested in another post You effectively sell the remaining period of the contract which has obligations and rights attached to a string of characters...

How does this affect UK tax... Well if its a cheap name and you want no assets attributed to the business write it off as legal expenses or advertising

If you want assets in your business.... Unless you paid a significant amount for it i.e. over £500 (If i remember correctly) it shouldnt be treated as an amortilisable asset...


The problem at the in treating domains like assets is there is no recognised methodology for measuring the value of domains in order to suggest they can be treated in a similar fashion as property .... I.e. that they increase in value or retain value of a significant period approx 20 years

So... really you have no choice but to write off and re-introduce on a completed sale for cheap domains...

The only choice you have is the method for writing off but thats another story

just to cover myself this does not constitute advice etc etc etc