Tax treatment when buying websites

From what I understand, websites can be depreciated by 10% a year is this correct?

I purchased a two year old E-commerce store, 10% a year seems like a very long time frame.

 

Depreciation can be at whatever rate you want. However, depreciation is not allowable for tax. Instead, you must calculate capital allowances. https://www.gov.uk/work-out-capital-allowances

 

For a significant website development project, I would consider depreciating it over 3 years.

 

Just to clarify, I bought the website although there will be further development. The store cost around £70k, I think 3 years would be better.

 

If the website cost £70k then I'd suggest you probably bought more than just an ecommerce platform. Was there any breakdown of assets and goodwill etc in the sale documentation? You may have to deal with each on a different scale...

 

Not really any documentation, I bought this through a broker. It is an established dropshipping store so there are no physical assets. I do not think there is really any goodwill, other than being ranked on Google it isn't known.

All of this is unfamiliar to me, my accountant did not really explain how this works.

 

You mentioned two years old, dropshipping and £70k on the same page. I'm not being funny but I'd focus on making sure that things are as they seem with the 'business' - and worry about accounting for it later.

 

The business is ok, I have had this for nearly a year.

 

OK, that's good to hear. I've heard of some really dubious practices of selling several dropshipping websites based upon the same 'sales history'.

Probably worth discussing with your accountant then. If you haven't got it in one already I'd be tempted to set up a limited company, sell the website to it and see if you can claim Annual Investment Allowance for it.