Claiming Software as a Business Expense
- 7 days ago
- 3 min read
If you pay for software to run your business, there’s a good chance it counts as an allowable business expense. The key is simple: it must be wholly and exclusively for business use (or you can only claim the business-use portion).
In this blog, we’ll cover what “software expenses” usually include, how they’re treated, and a few real-world examples like Canva, Zoom and Xero.
What counts as “software” for expenses?
Software costs are typically classed as day-to-day running costs, especially when you pay monthly or annually.
Common examples include:
Accounting software (e.g., Xero)
Video call software (e.g., Zoom)
Design tools (e.g., Canva)
Project management tools (Asana)
Cloud storage (Google Drive, Dropbox)
Email marketing platforms (Mailchimp, Mailerlite)
Password managers (Keeper, 1Password)
If it helps you deliver your service, manage clients, keep records, or run operations, it’s usually in the right territory.
Subscription vs one-off purchase: does it matter?
Often, yes.
1) Subscription software (most common)
If you pay monthly or annually, this is normally treated as a revenue expense a regular cost of running the business.
Examples:
Canva Pro monthly subscription
Zoom Pro annual plan
Xero monthly fee
2) One-off software purchases
If you buy software outright (less common now), the treatment can differ depending on what it is and how it’s licensed. If you’re unsure, it’s worth checking with your bookkeeper so it’s recorded correctly.
The “business use” rule (and why it matters)
To claim an expense, it needs to be for business purposes.
If it’s 100% business use:
You can normally claim the full cost.
If it’s mixed business and personal:
You should only claim the business proportion.
Example:If you use Zoom for client calls but also for personal chats, you’d typically claim only the portion that relates to business use (and ideally keep a simple note of how you’ve worked that out).
Examples: Canva, Zoom, Xero
Canva (design & marketing)
When it’s usually allowable:
Creating social media graphics for your business
Designing client proposals, brochures, flyers
Producing lead magnets, PDFs, presentations
Branding work (logos, templates)
Tip: If you’re using Canva for both personal and business (e.g., party invites and Instagram posts), consider whether you can justify 100% business use or claim a reasonable percentage.
Zoom (calls, meetings, training)
When it’s usually allowable:
Client meetings
Team meetings
Online consultations
Training sessions and webinars (where Zoom is the delivery platform)
Extra note: If you pay for add-ons (extra storage, webinar features), these may also be allowable if they’re for business use.
Xero (accounts & bookkeeping)
When it’s usually allowable:
Recording income and expenses
Sending invoices
Tracking VAT (if registered)
Bank feed and reconciliation
Producing reports to understand your numbers
Xero is a classic example of software that’s clearly linked to running the business, so it’s commonly claimed as an expense.
What records should you keep?
To keep things tidy (and stress-free if you ever need to check anything later), keep:
The invoice/receipt (digital is fine)
Proof of payment (bank/credit card transaction)
A note if you’re claiming a percentage due to mixed use
If you use bookkeeping software like Xero, attaching the receipt to the transaction is a great habit.
Quick reminder: everyone’s situation is different
Software is often claimable, but the “right” treatment can depend on:
Your business structure (sole trader vs limited company)
Whether it’s mixed use
Whether it’s a subscription or one-off purchase
Whether VAT is involved
If you’re not sure, ask. Getting it right now can save you hassle later.
Need help getting your expenses organised?
If you’re unsure what you can claim (or you’ve got a backlog of subscriptions and receipts to sort), I can help you get everything organised and recorded properly, so you feel confident your books are accurate and up to date.
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