Cloud storage & online backup

Subscription fees for cloud storage and online backup services used for business are allowable revenue running costs, treated in the same way as software subscriptions — not as capital items.

Sole traderAllowable

Ltd companyAllowable

EmployeeConditional

Conditions

Cloud storage and online backup subscriptions — such as services providing file storage, sync, or backup for business data — are allowable revenue running costs. GOV.UK's self-employed expenses guidance confirms that software with recurring renewal payments is claimable as an allowable expense regardless of duration (updated November 2024). A cloud storage subscription is a recurring fee for a service, not the purchase of a lasting asset, and is therefore an ordinary running cost rather than a capital item.
The subscription must be used for business. Where a personal cloud storage plan is partly used for business — for example, a consumer account that stores business files alongside personal photos — only the business proportion is deductible.
For a limited company, cloud storage and backup services paid for by the company for business use are an allowable corporation tax deduction.
Employees can claim relief on the cost of a cloud storage subscription necessarily incurred in performing their duties, where the employer has not provided storage and the subscription is genuinely required for the job — not simply convenient. The GOV.UK 'buying other equipment' guidance confirms that relief is only available where the item is needed to do the job and is used for work. This test is strict and most employees will not qualify unless the employer has specifically required personal provision.

Common mistakes

Claiming a personal cloud storage subscription in full when it also holds private data — only the business proportion is allowable.
Treating a one-off perpetual software or backup licence as a subscription — a lasting licence may need to be assessed as a capital item under traditional accounting rather than a straightforward running cost.

What to keep

Subscription invoices or payment records from the cloud storage provider, showing the service, amount, and period covered.
For a mixed personal and business plan, a brief note of the basis for the business proportion claimed.

Real-world example

A sole trader pays £96 per year for a cloud storage plan used exclusively to back up client files and business documents. The £96 is an allowable running cost, deducted as an ordinary expense in the tax year it is paid — no capital-allowances calculation is required.

Frequently asked

Is cloud storage a capital allowance or an ordinary expense?

An ordinary revenue expense. A recurring subscription for a cloud service is not the purchase of a lasting asset — it is a fee for access to a service during the subscription period. It is deducted as an allowable running cost in the year paid, whether you use the cash basis or traditional accounting.

Can I claim backup hardware — an external hard drive or NAS device — alongside the cloud subscription?

Yes, but the two are treated differently. The subscription is a revenue running cost. The hardware (external drive, NAS unit) is a separate capital item claimed through capital allowances under traditional accounting, or as an allowable expense under the cash basis. They serve the same backup purpose but are different types of cost for tax.

Not sure how this applies to you?

The rules shift with your circumstances. A qualified accountant can confirm what you can claim and handle it for you.

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Related allowances

Source: HMRC guidance · Last checked 2026-06-18

This page is general information based on HMRC published guidance, not tax advice. Status shown is a plain-English summary — your own position can differ. Always check the HMRC source above and speak to a qualified accountant before making a claim.