Cloud storage & online backup
Last checked 18 June 2026 · HMRC source
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.
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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
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Related allowances
Source: HMRC guidance