Are subscriptions tax deductible for freelancers?

Often, yes. If you are self-employed, software and online tools you pay for to run your business can count as business expenses in both the US and the UK. In both countries you can claim at most the business part of anything you also use personally, and you need records that show what you paid. The US rules come from the IRS and the UK rules from HMRC, so each country has its own sections below. This is general information, not tax advice. A tax professional can tell you how the rules apply to your situation.

Last updated October 15, 2026

Are software subscriptions tax deductible in the US?

Generally, yes, if you are self-employed and the subscription is an ordinary and necessary expense of your business. The IRS says an ordinary expense is one that is common and accepted in your field of business, and a necessary expense is one that is helpful and appropriate for your business. It does not have to be indispensable.

That test is in Publication 334, the IRS tax guide for individuals who use Schedule C, the form sole proprietors use to report income or loss from their business. The Schedule C instructions also mention software directly. Under other expenses (line 48), they say you can deduct technology and software tools that are ordinary and necessary expenses directly related to operating your business, and that this will generally include tax preparation software and subscription services paid to manage your business. You list the type and amount of each expense separately.

There is a limit. The same instructions say you can't deduct technology or software tools that must be depreciated or amortized, and that most computer software expenses must be capitalized and depreciated or expensed under section 179, with details in Publication 946. If you are not sure which side of that line a tool falls on, ask a tax professional.

If you were looking for Publication 535, Business Expenses: the IRS has discontinued it, and its last revision was for 2022. For details on business expenses, the Schedule C instructions point to chapter 8 of Publication 334.

Can I deduct a subscription I also use personally in the US?

Only the business part. Publication 334 says that if an expense is partly for business and partly personal, you separate the personal part from the business part, and the personal part is generally not deductible. The Schedule C instructions also say not to include personal, living and family expenses under other expenses.

The IRS gives a few examples of how this works:

Tax filing software: if you use it for both personal and business purposes, deduct only the portion you use for the business.
A vehicle: divide your expenses between business and personal use, for example by the miles driven for each purpose. In the IRS example, 16,000 of 20,000 miles are for business, so you can claim only 80% of the cost of operating the van as a business expense.
A home phone: don't deduct the base rate of the first phone line into your home, but you can deduct additional business costs above that base rate. For a second line, you can deduct the business percentage of its charges.

These pages don't set out a method for splitting a software subscription. Whatever split you use, write down how you worked it out and keep that note with your records. As an example with a made-up price: a cloud storage plan costs $10 a month, and you work out that 60% of your use is for client work. Over 12 months you pay $120. The business part is $120 × 0.60 = $72, and the other $48 is personal. A tax professional can tell you whether a split like that is reasonable for how you use the tool.

Are software subscriptions an allowable expense in the UK?

Usually, yes, if you are self-employed and the software is for your business. GOV.UK says that if you are a sole trader or a partner in a business partnership, you can deduct allowable expenses to work out your taxable profit before paying Income Tax. The office costs it lists as allowable expenses include:

Phone, mobile, fax and internet bills.
Computer software your business uses for less than 2 years.
Computer software if your business makes regular payments to renew the license, even if you use it for more than 2 years.

Other software for your business is claimed as capital allowances, unless you use cash basis. GOV.UK says cash basis is the default method of accounting from the 2024 to 2025 tax year, and you must opt out if you want to use traditional accounting.

GOV.UK also lists subscriptions to trade or professional journals, membership of a trade body or professional organization related to your business, and website costs as allowable. It says you can't claim gym membership fees.

Two cases change the picture. You can't claim expenses if you use the £1,000 tax-free trading allowance. And if you run a limited company, you are not self-employed, even if you are the owner and only employee: the company deducts its costs before paying Corporation Tax. If you're not sure whether a cost is allowable, GOV.UK says to contact HMRC.

What does "wholly and exclusively" mean for a mixed-use subscription in the UK?

It means a cost has to be for your business alone, so for a subscription you also use personally you can claim at most the business part. GOV.UK says that if you use something for both business and personal reasons, you can only claim allowable expenses for the business costs, and that you can't claim for any non-business use of premises, phones or other office resources. In its example, mobile phone bills for the year total £200, of which £130 is personal calls and £70 business calls, so you can claim £70.

The phrase comes from the law. HMRC's internal Business Income Manual explains that the law says expenditure can't be deducted in working out trading profits unless it is incurred wholly and exclusively for the purposes of the trade, profession or vocation. It separates two cases:

A definite part or proportion of an expense is spent wholly and exclusively for the business. That part should not be disallowed just because the whole expense isn't.
An expense is incurred for a dual purpose, with a business reason and a non-business one. The manual says such expenditure should be disallowed, and there is no provision that allows a business proportion.

For internet and phone use at home, GOV.UK says you may be able to claim a proportion of the costs, and you'll need a reasonable method of dividing them, for example by the number of rooms you use for business or the time you spend working from home. Simplified expenses, GOV.UK's flat rates, cover only some vehicle costs, working from home and living at your business premises. All other expenses are worked out from the actual costs, and the working from home flat rate does not include telephone or internet, so you claim the business proportion of those bills from the actual costs too.

Which case a mixed-use subscription falls into depends on how you use it. If you are unsure, ask HMRC or a tax professional, and keep a note of how you worked out any split.

How do I separate business and personal subscriptions?

Pay for business subscriptions from a card or account you use only for the business, and keep a note of which subscriptions are business, personal or mixed. IRS Publication 583 says one of the first things to do when you start a business is open a business checking account, keep it separate from your personal one and use it for business purposes only. In the UK, GOV.UK says you might be able to use a personal or business bank account for your business, and to check with your bank which type you can use. Either way, it says you must be able to identify business transactions.

List every subscription you pay for. The guide to finding all your subscriptions covers app stores, PayPal, card statements and your inbox.
Mark each one business, personal or mixed. For mixed ones, write down the business share and how you worked it out.
In each business subscription's billing settings, switch the payment method to your business card or account. Move personal ones off it.
Use your business email address for business accounts, so receipts and invoices arrive in one place.
Cancel what you no longer need. The subscription audit walks through each one: keep, downgrade or cancel.

Paying from the business card does not by itself make a subscription a business expense. What counts is whether it meets the rules above, and the personal part of a mixed-use tool stays personal.

What records should I keep for each subscription, and for how long?

Keep an invoice or receipt for every charge and the statement that shows you paid it, generally for 3 years after you file in the US and for at least 5 years after the 31 January deadline in the UK. The IRS says you must be able to prove certain elements of expenses to deduct them, and GOV.UK says to keep records of all your business expenses as proof of your costs. For each subscription, that means:

The invoice or receipt for each charge, not only the first one.
Which card or account paid it, and the statement showing each charge.
The plan, price and billing cycle, and the dates you started and canceled.
For mixed use, the business share and how you worked it out.

In the US, the IRS says supporting documents for an expense should identify the payee, the amount paid, proof of payment and the date incurred, with a description that shows it was a business expense. Invoices, credit card receipts and statements, and account statements are all on its list, and you may need a combination of them to cover everything. Publication 583 says a credit card statement used to prove payment must show the amount charged, the payee's name and the transaction date. Electronic records have to meet the same requirements as paper ones, and the IRS suggests organizing documents by year and type of expense.

How long to keep US records depends on your situation. The periods count from when you filed the return, and a return filed before the due date is treated as filed on the due date:

3 years, if none of the cases below applies.
3 years from filing or 2 years from paying the tax, whichever is later, if you file a claim for credit or refund after you file your return.
6 years if you don't report income you should have, and it is more than 25% of the gross income shown on your return.
7 years if you file a claim for a loss from worthless securities or a bad debt deduction.
Indefinitely if you don't file a return, or if you file a fraudulent return.

The IRS also says to keep copies of your filed tax returns.

In the UK, you don't send records with your tax return, but you need to keep them so you can show HMRC if asked, and they must be accurate. GOV.UK lists bank statements among the types of proof. Keep them for at least 5 years after the 31 January submission deadline of the tax year: if you sent your 2022 to 2023 return online by 31 January 2024, keep the records until at least the end of January 2029. If you send a return more than 4 years after the deadline, keep the records for 15 months after you send it.

If you have to use Making Tax Digital for Income Tax, you or your agent need software that works with it to create, store and correct digital records of your self-employment income and expenses, and to send quarterly updates to HMRC. GOV.UK says sole traders should have started from 6 April 2026 if their qualifying income was over £50,000 for 2024 to 2025. The threshold is £30,000 for 2025 to 2026, with a start date of 6 April 2027, and £20,000 for 2026 to 2027, with a start date of 6 April 2028. GOV.UK has a tool to check whether and when it applies to you.

How do I total what I spent on subscriptions in a tax year?

Add up what each business subscription cost during the tax year, from your receipts and invoices, and leave out any personal share. In the UK, if you don't prepare accounts, GOV.UK says you record income and expenses for each tax year, 6 April to 5 April. With cash basis you record an expense when you pay the bill, and with traditional accounting you record it by the date you were billed.

As an example with made-up prices, say you paid for three tools all year:

A design tool at $15 a month: $15 × 12 = $180.
Cloud storage at $120 a year: $120.
A writing tool at $8 a month that you use half for work: $8 × 12 = $96, of which $48 is the business part.

The business total is $180 + $120 + $48 = $348. All three together cost $396, and the other $48 is personal. Multiplying by 12 only works if the price stayed the same all year. If a price changed, a trial converted partway through or you canceled, add up the receipts instead.

The subscription cost calculator converts weekly, monthly, quarterly and yearly prices and adds them up per month and per year, which helps you check the totals. For a list you keep all year, the subscription tracker spreadsheet has per-year columns and a Notes column where you can mark each row business, personal or mixed. These totals are a check, not a record: your invoices, receipts and statements are what support your tax return.

Subskim is a free subscription tracker with monthly and yearly totals on a dashboard. It has no tax features, so keep your receipts and statements as well, and ask a tax professional which subscriptions you can claim.

Sources

More guides

See every renewal before it charges.

Put your subscriptions on one calendar, flag trials before they convert and total everything in one currency. Free, no bank login.

Get started free