Software & SaaS Subscriptions — United Kingdom Tax Rules

Claim the cost of business software subscriptions including SaaS tools, apps, and cloud platforms.

Claimable: Fully claimable · Tax authority: HMRC

HMRC Rules

  • Software subscriptions used wholly and exclusively for business are fully deductible.
  • SaaS tools, cloud platforms, project management software, and professional apps qualify.
  • If software is used for both personal and business purposes, claim only the business proportion.
  • Annual software licences and monthly SaaS fees are both deductible as revenue expenses — not capital.
  • Industry-specific software (e.g. accounting software, design tools, developer platforms) are fully deductible.

Limits

No cap — software subscriptions are revenue expenses deductible in the year of payment. No need for capital allowances.

Worked Example

Freelance developer Sam pays £120/month for AWS, £84/year for GitHub Pro, £600/year for Figma, and £156/year for 1Password Teams — all used exclusively for client work. Annual claim: (£120 × 12) + £84 + £600 + £156 = £2,280.

Record Keeping

  • Keep subscription invoices or billing emails for each tool
  • Note the business purpose for each subscription
  • For mixed-use software, document your business-use percentage
  • Keep records of annual vs monthly billing to capture all payments in the correct tax year

Frequently Asked Questions

Are SaaS subscriptions classed as capital or revenue?

SaaS subscriptions (monthly or annual access fees) are revenue expenses — deductible in the year of payment. Only perpetual software licences may be treated as capital. Most modern software is subscription-based and therefore a straightforward deduction.

Can I claim Notion, Slack, or project management tools?

Yes, if used for business purposes. Tools used to manage client projects, communicate with clients or collaborators, or run your business operations are deductible. If also used personally, apportion accordingly.

What about cloud storage subscriptions like Dropbox or Google Workspace?

Cloud storage and productivity suite subscriptions (Google Workspace, Microsoft 365, Dropbox Business) used for business are fully deductible. Personal plans used partly for business should be apportioned.