What happens if HMRC disputes my declared expenses?

Understanding the question: what counts as “claimable” in the first place?

If you’ve paid for a website theme or template and you use it for your business, it’s natural to ask: “Can I claim that as an expense?” In many cases, the answer is yes—at least to some extent—but the real-world outcome depends on what the purchase actually is, how your business is structured, and how the theme or template is used. It also depends on whether the cost is treated as a day-to-day running cost or as something that creates a longer-lasting asset.

Website themes and templates sit in an interesting middle ground. They can feel like a simple expense, similar to buying stationery or paying for a monthly software subscription. But they can also be part of building or improving a business asset (your website), which may push the cost into a different category. The best way to think about it is to zoom out and ask: “Is this a routine operating cost of running my business online, or is it part of creating or upgrading an asset that benefits the business over time?”

This article breaks the topic down in a practical way: what business-related themes/templates typically are, when they are usually treated as allowable expenses, when they might need to be treated as capital costs, how partial business use works, and what records you should keep so your claim is well supported. It’s written to help you make decisions and keep clean records, not to overwhelm you with jargon.

What are website themes and templates, really?

At a simple level, a theme or template is a pre-designed website layout, style system, and sometimes functionality bundle. Depending on the platform and vendor, what you buy might include:

• A design framework (fonts, colours, spacing, page layouts)

• Pre-built page templates (home, about, services, shop, blog, contact)

• A theme “engine” with customisation settings

• Optional add-ons (demo content, icons, stock images, premium fonts)

• Updates for a period of time, sometimes for life

• Support, usually for a fixed support window

• Licensing terms (single site, multiple sites, client work, resale limits)

From an expense-claim perspective, the important question is not “Is it a theme?” but “What did I pay for, and what did it produce for the business?” A one-off purchase of a theme to launch a new website may be treated differently from an ongoing subscription that provides updates, support, and access to multiple templates.

When themes/templates are typically treated as a business expense

In many common scenarios, website themes and templates are treated as normal business costs because they are incurred wholly and exclusively for the purpose of running the business. If your website is a key part of how you market, sell, take bookings, or communicate with customers, then a theme or template is often a cost of operating that website.

Here are examples where theme/template costs commonly align with a routine business expense:

1) You buy a theme to refresh the look of an existing business website

If your business already has a website and you buy a theme to improve usability, update styling, or modernise branding, the cost often looks like a running cost of marketing and operations—especially if the change is cosmetic or incremental rather than a complete rebuild.

2) You pay for a template as part of ongoing marketing activity

If you use templates to quickly publish landing pages for campaigns (for example, seasonal promotions, lead magnets, webinars, or limited-time offers), the costs can resemble marketing spend.

3) You subscribe to a template library or theme membership

Some services charge monthly or annual fees for access to a library of templates, updates, and support. These tend to look more like software subscriptions or web services. If you need the subscription to keep using updates and support, it’s often easier to treat it as an ongoing business expense.

4) You’re a freelancer/agency and buy themes for client work

If you purchase a theme specifically for a client project (and the licence allows it), the cost is tied to earning revenue. Depending on how you invoice the client, you may treat it as a cost of sales or a project expense. If you recharge it to the client, keep records that show the pass-through and the licensing terms.

In each of these cases, the key idea is that the cost is incurred to keep the business functioning or to help generate income, and it does not necessarily create a standalone, enduring asset separate from the ongoing operations of the business.

When themes/templates may be treated as a capital cost instead

Sometimes, a theme or template purchase is part of creating a new website or substantially improving an existing one. In those situations, the cost can be treated more like capital expenditure—meaning it’s associated with building or enhancing an asset that provides long-term benefit.

Not every website improvement becomes “capital,” and different tax systems can draw lines differently. But conceptually, these situations are more likely to raise the “capital vs revenue” question:

1) You build a brand-new website from scratch

If your business didn’t have a website and you build one for the first time, major costs associated with creating that website can be viewed as creating a new asset. A theme/template used as a foundational part of the new site can be considered part of that build cost.

2) You undertake a substantial rebuild, not just a redesign

If you move platforms (for example, from a basic brochure site to a full e-commerce store), rebuild key functionality, and significantly change the structure, then the theme may be part of a more significant improvement rather than routine upkeep.

3) The theme purchase includes significant functionality that replaces custom development

Some themes are more like “website applications,” bundling booking systems, learning management tools, advanced e-commerce functionality, membership features, or complex integrations. If the purchase effectively provides a significant new capability that changes what the website can do, it may look less like a simple styling expense and more like acquiring a functional asset.

Even if a cost could be treated as capital, it doesn’t automatically mean you get no tax relief. It just means the relief may be achieved through different rules (for example, through depreciation/amortisation or capital allowance-type approaches, depending on your jurisdiction and business type). Practically, many small businesses focus on consistency and clear documentation: if the purchase is clearly part of a major build, treat it consistently with other build costs; if it’s a minor improvement, treat it as an operating expense.

One-off purchase vs subscription: why it matters

Two people can buy “a theme,” pay similar amounts, and yet the tax treatment can differ because the product structure is different.

One-off theme purchase

A one-time payment for a theme licence (especially if it includes lifetime updates) can feel like buying an asset. But it can also be treated as a business expense if it’s part of maintaining a business website. In practice, the deciding factors tend to include materiality (how large the cost is), whether it’s part of a new build, and how your accounting policies treat similar costs.

Subscription or membership access

Subscriptions are typically easier to classify as running expenses because they are recurring and tied to ongoing access, updates, and support. If you stop paying, you often lose access to new templates or updates, and sometimes support. That “ongoing service” nature supports the idea that you’re paying for continual benefit rather than buying a standalone asset.

Bundled packages with multiple components

Some purchases bundle the theme with hosting, a builder plugin, premium extensions, image libraries, or marketing tools. If your receipt or invoice breaks down the components, you may need to allocate the cost across categories. If it doesn’t, keep notes explaining what was included and why you treated it the way you did.

Wholly and exclusively: business use vs mixed use

A key principle in many tax systems is that you can generally claim business expenses that are incurred for business purposes. That sounds simple until you buy a theme you use for multiple purposes, such as:

• A website that includes both business pages and a personal blog

• A portfolio site that mixes paid client work with personal projects

• A template licence that covers multiple sites, some business and some personal

• A theme you buy partly to learn web design, partly to build your business site

When there’s mixed use, you usually can’t claim 100% as a business cost unless you can genuinely show the purchase was solely for business. If there’s a clear split, you may be able to claim the business proportion.

How to think about apportionment in practice

Apportionment means dividing the cost between business and non-business use based on a reasonable method. “Reasonable” is the operative word: choose a method you can explain and support with evidence.

Examples of reasonable approaches include:

• Number of sites covered by the licence (e.g., 3 sites total, 2 business sites = 2/3 business)

• Percentage of the website that is business-related (e.g., most pages and traffic are business-related, with a small personal section)

• Revenue connection (more relevant for agencies: themes used predominantly for billable client work)

The best method is often the simplest one that reflects reality. Keep a note showing how you calculated the business share, and keep the licence terms that show what you bought.

Agency, freelancer, and reseller scenarios: special considerations

If you build websites for clients, themes and templates can be part of your core costs. But there are a few wrinkles worth considering.

1) Licensing: is the purchase allowed for client use?

Before you treat a theme purchase as a project cost, confirm the licence permits using it for client websites. Some licences are “single site” and only for one end user; others allow multiple sites or client work under a developer licence. If you can’t legally use the theme for the purpose you bought it for, that’s a business risk, and it also undermines the basis for claiming it as a business cost.

2) Recharge vs absorb

If you recharge the theme cost to a client as a separate line item, treat it consistently. Keep the client invoice showing the recharge and keep proof of the original purchase. If you absorb the cost in your project fee, record it as part of your normal expenses or cost of sales (depending on how you categorise project costs).

3) Theme libraries and tool stacks

Agencies often subscribe to libraries of themes, templates, page builders, and add-ons. If a subscription is used across many client projects, it’s usually an overhead/tooling expense. Keep evidence of ongoing payments and an explanation that it supports multiple client deliverables.

What if the theme includes add-ons, plugins, or stock assets?

A theme purchase can include extras that complicate categorisation. Here’s how to think about the most common add-ons.

Plugins and extensions bundled with the theme

Some themes include premium plugins (page builders, sliders, form tools, e-commerce enhancements). If they’re inseparable from the theme purchase, you may simply treat the whole purchase as a single website-related cost. If they’re itemised separately, you might categorise plugins as software subscriptions/licences and the theme as design-related. The main goal is consistency and accurate recordkeeping.

Stock images, icons, and fonts

Some theme packs include image bundles, icon sets, or premium fonts. These can be legitimate business costs if used in business marketing or on the business website. But be careful: sometimes the “demo images” shown in a theme preview are not included in the licence, or they are included under limited terms. Keep the licensing information for any assets you actually use.

Support and updates

If you pay extra for support/updates, that portion is very clearly an ongoing service. If it’s bundled into an annual renewal, treat it like a service renewal. If the renewal is optional and you keep using the theme without renewing, you can still usually claim the renewal cost if you chose to pay it for security, compatibility, and business continuity.

Practical recordkeeping: what to save so your claim is defensible

You don’t need a mountain of paperwork, but you do need a clear trail showing what you bought, when you bought it, and how it relates to your business.

Keep these records

• The invoice/receipt showing vendor name, date, amount, and currency

• Proof of payment (card statement, payment confirmation)

• The licence terms (download a PDF or screenshot the licence page)

• Notes explaining business purpose (e.g., “Purchased Theme X to redesign business site for improved mobile UX and conversion”)

• If mixed use: your apportionment calculation and rationale

• If used for a client: project documentation showing it was part of that engagement

Why notes matter

It’s easy to forget the business context six months later, especially if the vendor name on your bank statement is not obviously “themes/templates.” A one-sentence note in your bookkeeping software can prevent confusion later and make your records much easier to defend if questions arise.

Common edge cases and how to handle them

Real life is messy. Here are some scenarios that frequently cause uncertainty.

You bought the theme before you started trading

If you purchased a theme before your business began actively trading, you may still be able to treat it as a business cost if it was acquired specifically to set up the business and you later used it for the business website. Many systems have rules about pre-trading or start-up costs. Keep clear evidence of intent and later business use, and record the date your business started operating.

You bought multiple themes “just in case”

If you buy a handful of themes, but only use one, what about the unused ones? If the purchase was genuinely for business—such as evaluating options for a redesign or maintaining a library for client work—there can still be a business rationale. However, buying excessive unused items can look less connected to business need. The more you can connect the purchases to real business activity (client pipeline, project needs, A/B testing, rapid deployment), the stronger your position.

You bought a theme for “learning”

If your main motive is personal education or experimenting, claiming it as a business expense becomes harder. Training costs can be allowable in some contexts, but it depends on whether the training maintains or updates existing skills used in the business versus helping you start a new trade. If the theme was primarily bought as a learning tool and only incidentally used for business, consider claiming only the portion that reflects genuine business use (or not claiming it at all if the business connection is too weak).

You used the theme for a side hustle and your main employment

If you are employed and also run a separate business, the website theme belongs to the business activity (the side hustle), not your employment. Keep business records separate and treat the theme cost as part of your business bookkeeping, not as an employment expense.

How to categorise themes/templates in your bookkeeping

Bookkeeping categories vary, but the goal is to record the expense in a consistent place that reflects its nature. Here are common category options people use:

• Website costs

• Software subscriptions / licences

• Advertising / marketing

• Digital services

• IT / computer expenses

• Cost of sales (for agencies/freelancers where theme costs directly relate to delivering client work)

Pick one category that matches your accounting approach and use it consistently. If you later change your categorisation method, document the change so your records remain coherent over time.

VAT/sales tax considerations for digital theme purchases

Digital products can have specific VAT or sales tax treatment, especially when buying from overseas vendors. A theme vendor may charge VAT based on your location, your business status, and whether you provide a valid tax registration number. The practical steps are:

• Ensure the invoice shows the correct tax treatment (where relevant)

• Store VAT/tax invoices properly if you reclaim tax

• If you are registered for VAT/sales tax and the vendor is overseas, check how reverse charge or import-of-services rules may apply in your situation

Because these rules vary by jurisdiction and can change, it’s worth checking the current guidance for your country or asking a tax professional if you frequently purchase digital services from international suppliers.

Can you claim the cost if you use a free theme?

If the theme is free, there’s nothing to claim as an expense because you didn’t incur a cost. However, you may still have related costs that are claimable, such as:

• Paid page builder plugins

• Premium fonts or icon sets

• Developer time (if you pay a contractor)

• Hosting, domain registration, and SSL services

• Paid performance/security tools

Free themes can still lead to legitimate website operating costs elsewhere. Track those in the same disciplined way as you would track paid theme purchases.

What about custom design work based on a template?

Often a template purchase is just the starting point. You might then hire a designer or developer to customise it, build additional pages, improve speed, or integrate tools like booking systems and email marketing. These additional costs can be easier to justify as business costs because they are clearly connected to running the business website.

However, if the work is part of building a brand-new site or a substantial rebuild, it may fall into the “capital vs revenue” conversation discussed earlier. The more the work looks like a major build rather than routine maintenance, the more important it becomes to treat it consistently with other build costs and to keep strong documentation.

What to do if you’re unsure: a practical decision checklist

If you’re uncertain how to treat a theme/template purchase, use this checklist to reach a sensible, defensible position:

1) Was it purchased for business purposes, and can you explain how it helps you earn income or operate the business?

2) Is the website primarily for business rather than personal use?

3) Is the cost small and routine, or is it part of a major website build or rebuild?

4) Is it a recurring subscription (ongoing service) or a one-off purchase (more asset-like)?

5) Does the invoice show separate items (theme, plugins, support, asset packs) that should be categorised separately?

6) Are there licensing terms that support the business use (especially for client work)?

7) If mixed use exists, do you have a reasonable apportionment method and a note explaining it?

8) Have you saved the invoice, proof of payment, and brief business-purpose notes?

If you can answer those questions clearly and keep the relevant evidence, you’re in a strong position. If you can’t, the next best step is to tidy your records and consider getting advice tailored to your jurisdiction and business structure.

Examples: how different businesses might treat theme/template costs

Sometimes examples make the concepts click. Here are realistic scenarios showing how the same type of purchase can be treated differently depending on context.

Example 1: Sole trader photographer updates an existing site

A photographer buys a £79 theme to modernise their portfolio site and improve mobile layout. The site is used purely to attract clients and show work samples. This looks like a straightforward business website cost. The photographer keeps the invoice and a note: “Theme purchased to improve booking enquiries and mobile performance.”

Example 2: New e-commerce startup launches its first website

A new business spends £2,000 on development and £250 on a premium theme as part of launching its first online store. Because this is part of the initial site build, the theme may be treated consistently with other website build costs, potentially as capital expenditure depending on applicable rules and accounting policies. The business keeps all invoices grouped under “website build” documentation.

Example 3: Marketing consultant buys a template membership

A consultant pays £180 per year for access to a template library used to create landing pages for lead generation and client campaigns. This looks like an ongoing service. The consultant claims the annual subscription as a business expense and keeps yearly renewal invoices.

Example 4: Agency uses a multi-site developer licence

A small agency buys a developer licence that allows use across unlimited client sites and includes updates/support for one year. The agency treats this as an overhead tool. If a specific client requires a niche theme purchase, that additional cost is recorded as a project cost and linked to that client job.

Potential pitfalls to avoid

Most problems don’t come from claiming a genuine business theme purchase. They come from poor documentation, mixed use without apportionment, or misunderstanding what was bought. Here are pitfalls to watch:

• Claiming 100% when the theme is used on a mixed personal/business site without any justification

• Losing invoices and relying only on bank statements that show unclear vendor names

• Buying themes under personal accounts and mixing personal and business payment methods

• Using a licence outside its permitted scope (especially for client work)

• Treating a major new site build inconsistently (some costs expensed, others capitalised) without a clear policy

A little organisation goes a long way. Clear notes and consistent categorisation often matter more than trying to “optimise” the outcome for a small purchase.

Bottom line

Yes, you can often claim expenses for business-related website themes or templates, particularly when the purchase is made wholly for business purposes and supports your business website’s operation, marketing, or client delivery. The main deciding factors are whether the cost is part of routine running/marketing activity versus part of creating or significantly improving a longer-term website asset, and whether there is any personal or mixed use that needs to be apportioned.

If you keep good records (invoice, proof of payment, licence terms, and a short business-purpose note) and apply a consistent approach, theme/template costs are usually straightforward to handle. When the cost is large, part of a major build, or involves complicated licensing or mixed use, it’s worth being extra careful in how you document and categorise it so your claim stays clear and defensible.