Cloud storage & online backup

Can I claim it?

Sole traderYesGenerally allowable

Limited companyYesGenerally allowable

EmployeeIt dependsDepends on your circumstances

Last checked 23 October 2026 · HMRC source

HMRC's guidance does not name cloud storage or online backup. A business subscription paid by regular payments is closest to what HMRC says about regular software licence payments, which are a running cost rather than a capital item. A company follows its own rules for software, and an employee can claim only if the strict employee expenses test is met.

Conditions

HMRC's guidance does not name cloud storage or online backup, so this entry applies the closest rules HMRC does publish: those for software paid for by regular licence payments. Treating a storage subscription that way is our reading, not an HMRC statement about cloud storage.
For a sole trader, GOV.UK's self-employed expenses guidance lists computer software if your business makes regular payments to renew the licence (even if you use it for more than 2 years) among the costs you can claim as allowable expenses. HMRC's Business Income Manual says regular payments for a software licence that are akin to a rental are revenue (BIM35805), and that periodical licence payments are deductible unless they are shown to be instalments of a capital sum (BIM35810).
Timing differs by accounting method. Under traditional accounting, HMRC says the timing of relief for periodical licence payments follows generally acceptable accounting practice (BIM35810). Under cash basis you only count the expenses you've actually paid.
For a company, HMRC says licences and rights over software usually fall within the corporate intangible fixed assets regime, under which expenditure is normally brought into the computation of trading profits in accordance with its accounting treatment (BIM35801). How a company's storage subscription is accounted for is a question for its accountant.
A limited company deducts the costs of running its business before Corporation Tax. The test is statutory: section 34 ITTOIA 2005 for sole traders and section 54 CTA 2009 for companies allow no deduction for expenses not incurred wholly and exclusively for the purposes of the trade, but do not prohibit a deduction for an identifiable part or identifiable proportion of an expense that is.
Where one plan holds business and personal files, HMRC distinguishes two cases. Where a definite part or proportion of the expense is wholly and exclusively for the trade, that part is not disallowed (BIM37600). Where an expense is incurred for a dual purpose, it fails the statutory test and there is no provision that allows a 'business' proportion (BIM37007).
An employee can deduct an expense only if they are obliged to incur and pay it as holder of the employment and it is incurred wholly, exclusively and necessarily in the performance of the duties of the employment (section 336 ITEPA 2003). HMRC adds that the expense must be one that each and every holder of that employment would have to incur (EIM31630), and that the test looks at the requirements of the job itself rather than the circumstances or preferences of any particular individual doing it (EIM31640).
For an employee's mixed-use costs, HMRC says a single expense can be apportioned if a definite part or proportion of it can properly be attributed wholly and exclusively to the performance of the duties, but you cannot apportion expenditure where it serves two or more purposes concurrently and one of those purposes is not to do with the duties (EIM31661).

Common mistakes

Claiming a personal plan in full when it also holds private photos and files. Only a definite business part is allowable (BIM37600), and a dual-purpose expense with no definite business part gets no deduction (BIM37007).
Treating a one-off payment for backup software you will use for years as if it were a subscription. For a sole trader, HMRC asks whether a lump-sum licence has a sufficiently enduring nature, and accepts revenue treatment where the expected useful economic life is under two years (BIM35805); see Software subscriptions.
Employees paying for storage the job does not require. HMRC's test looks at the requirements of the job itself, not the preferences of the person doing it (EIM31640).

What to keep

Subscription invoices or payment records from the provider, showing the service, the amount and the period covered.
Where one plan serves business and personal use, a record of how the business part was identified.

Real-world example

A sole trader pays a monthly fee for an online backup plan that holds only client files and business records. GOV.UK lists software your business pays for by regular renewal payments as an allowable expense, and HMRC treats regular licence payments akin to a rental as revenue, so she claims the fee as a running cost with no capital allowances calculation. Her family's photos are on a separate personal plan, which she does not claim.

Frequently asked

Is cloud storage a capital allowance or an ordinary expense?

HMRC's guidance does not name cloud storage. For a sole trader, a subscription paid by regular payments is closest to what HMRC says about software licences: regular payments akin to a rental are revenue (BIM35805), and GOV.UK lists software your business pays for by regular renewal payments as an allowable expense even if you use it for more than 2 years. A company follows the intangible fixed assets regime for software (BIM35801), so ask its accountant.

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

The hardware is a different kind of cost. For equipment you keep to use in your business, GOV.UK says a sole trader claims allowable expenses if they use cash basis accounting and capital allowances if they use traditional accounting. See Computer peripherals.

Can I claim a storage subscription I pay for as an employee?

Only if it passes the employee test in section 336 ITEPA 2003: you must be obliged to incur and pay it as holder of the employment, and it must be incurred wholly, exclusively and necessarily in the performance of your duties. HMRC adds that it must be a cost each and every holder of that employment would have to incur (EIM31630).

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Bookkeeping £20.00 to 40 transactions, then 50p each
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* The Accountancy Partnership’s own offer, taken off the standard monthly fee above, for readers arriving through this link. It is not on their public pricing pages. Checked 24 October 2026.

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Where this answer comes from

Every figure, rule and status on this page traces to these GOV.UK and legislation.gov.uk pages, all read on 23 October 2026.

HMRC internal manuals

Legislation

GOV.UK guidance

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.

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