Question:
Charity website depreciation
We are a not-for-profit registered charitable association. Our auditors have suggested that the cost of upgrading our website may be able to be capitalised as an intangible asset and written off over the next few years. Is that correct?
What would be the recommended depreciation rate on a straight-line basis?
Answer:
Recent changes are outlined below:
As you are a charitable association, you don’t pay tax and the capital allowance rules in the tax regime are not relevant.
Under usual accounting treatment, if the website upgrade represented a replacement or a significant extension of your existing website, it could be treated as capital expenditure and depreciated over a number of years.
You should estimate the likely period until the next significant upgrade in order to determine the depreciation rate. If, for instance, you determine the next significant upgrade will occur in four years’ time, you should depreciate the expenditure at the rate of 25% per annum on a straight-line basis.
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