Software subscriptions

Yes

Software you pay for monthly or yearly — accounting tools, job management apps, design software — is a normal business expense. Claim it in the year you paid. This works the same on traditional accounting and cash basis. HMRC specifically says software where you make regular payments to renew the licence counts as an allowable expense, even if you end up using it for more than two years. One-off software you buy outright is treated differently. On traditional accounting, it is a capital purchase — claim it through the Annual Investment Allowance (AIA). On cash basis, just deduct it as a normal expense. If you use the software personally too, only claim the business portion.

Key thresholds

No monetary threshold for subscription software. The cut-off between expense and capital comes down to whether you make regular renewal payments or buy outright. HMRC also allows one-off software as a normal expense if your business uses it for less than two years (source: gov.uk/expenses-if-youre-self-employed/office-property). One-off software on traditional accounting otherwise follows AIA rules (£1 million annual limit).

Common questions

I pay £30 a month for accounting software to do my invoicing. Can I claim it?

Yes, the full £360 a year. Ongoing subscription payments for business software are a normal expense. If you also use it for personal finances, only claim the business proportion.

I pay £50 a month for a job management app for my plumbing business. Is that claimable?

Yes. Software you use to run your business is claimable. The £600 a year comes off your taxable profit. Keep a note of what the app is for.

I bought a one-off CAD software licence for £1,200 that I own permanently. How do I claim it?

On traditional accounting, this is a capital purchase. Claim the full £1,200 via AIA in the year you paid for it. On cash basis, deduct it as a normal expense in the year of payment. Either way, the full cost comes off your profits.

Watch out for

HMRC's line is about regular renewal payments. A perpetual licence paid once is capital. A subscription paid regularly is a day-to-day expense. Paying for an annual subscription upfront still counts as a day-to-day expense, not a capital purchase.
If a subscription has a personal element — say a Microsoft 365 subscription you also use for personal documents — only claim the business proportion. HMRC does not give a formula. Use a reasonable method and keep a note.
HMRC allows one-off software as a normal expense if you expect to use it for less than two years. So a short-lived tool bought outright can still be expensed directly, even if it is not a subscription.

Common mistakes

Claiming a one-off perpetual software licence as a day-to-day expense on traditional accounting. It should go through capital allowances (AIA). In practice the tax result is often the same if AIA is available, but the paperwork differs.
Claiming 100% of a subscription you also use personally. Only the business proportion is claimable.

Cash basis vs traditional accounting

Subscription payments are a day-to-day expense on both methods, deducted in the period you paid. One-off software purchases are different: on traditional accounting, use capital allowances (AIA); on cash basis, deduct it as a normal expense in the year of payment.

HMRC does not publish a dedicated software-expenses guide — the rules derive from the office, property and equipment section of the self-employed expenses guidance.

If you are uncertain whether a particular software purchase is a capital item or revenue expense, check with an accountant.

HMRC sources

https://www.gov.uk/expenses-if-youre-self-employed https://www.gov.uk/expenses-if-youre-self-employed/office-property

Last verified: July 2026 · Tax year 2026/27

Related expenses

Phone and internet costs Stationery and office supplies Accountancy and bookkeeping fees Advertising and marketing

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This guidance is for general information only. Tax rules change. Verify with HMRC or a qualified accountant before filing.

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