Can I claim expenses for business-related hardware bought on subscription plans?

Understanding what “claiming expenses” really means

When people ask, “Can I claim expenses for business-related hardware bought on subscription plans?”, they’re usually trying to figure out whether a monthly device plan can be treated like a normal business expense. The short, practical answer in many situations is: you can often claim the business portion of the cost, but the “how” depends on the structure of the subscription, who owns the device, how it’s used, and the show-your-work documentation you keep.

A subscription plan can mean several different things: a mobile phone plan that includes the handset, a laptop offered on a “device-as-a-service” contract, a rental-style arrangement where the provider retains ownership, or a finance-style agreement where you’re effectively paying in instalments. Each structure can lead to a different accounting and tax treatment. That’s why two people can buy the same laptop “on subscription” and end up claiming it differently.

This article walks through the most common subscription-plan models, how expenses are typically treated in business accounts, what to watch out for, and how to keep records so your claim is defensible if anyone asks questions later.

What counts as “business-related hardware”?

Hardware is usually anything tangible you use to run your business: laptops, desktops, monitors, printers, scanners, tablets, phones, routers, point-of-sale terminals, external drives, cameras, microphones, and similar equipment. Accessories can count too, such as keyboards, docking stations, cables, and protective cases.

The “business-related” part is the key. It doesn’t have to be exclusively business-use, but if there is mixed use (business and personal), you generally need a reasonable way to apportion the claim to reflect business use. The more personal use there is, the more important it becomes to have a method you can explain simply.

Why subscription plans complicate things

If you pay cash for a laptop outright, the questions are relatively straightforward: how much did it cost, when did you buy it, how much is business use, and does it get expensed immediately or treated as an asset and depreciated? With subscriptions, you can face extra layers:

1) Ownership: Do you own the device at the start, at the end, or never?

2) Bundling: Is your monthly fee partly for the device and partly for services like support, replacement cover, warranty, insurance, software, or connectivity?

3) Interest or finance charges: Is the subscription really a finance arrangement with implicit interest?

4) Upgrades and swaps: Can you change devices mid-contract, return them, or upgrade annually?

5) Early termination: Are there break fees or remaining balance payments that change the cost profile?

Because of these factors, the “expense” may not simply equal “whatever you pay monthly.” The right treatment depends on what the payments represent.

The main subscription models and how they’re commonly treated

Model 1: Service subscription that includes hardware use (rental / lease-style)

In this model, you’re paying for access to hardware rather than buying it. The provider usually retains ownership, and you may return the device at the end. This is common in device-as-a-service offerings, managed IT equipment subscriptions, and some phone “leasing” programmes.

In many cases, the monthly payments can be treated as an operating expense, similar to renting equipment—particularly if you never own the asset. If there is mixed use, you’d typically claim only the business portion. The simplicity here is appealing: you pay monthly, you expense monthly, and you keep invoices as evidence.

However, bundling can matter. If the subscription includes distinct add-ons (support, insurance, software licences), it can still be expensed, but you’ll want to ensure your invoice breakdown is saved. If it is a single blended fee, you’ll generally rely on the invoice description and contract terms to justify treating it as a service expense.

Model 2: Subscription that is effectively “buy now, pay monthly” (instalment purchase / finance)

Some “subscription plans” are basically instalment payments for an item you are purchasing. Sometimes ownership passes to you immediately; sometimes it passes at the end after the final payment; sometimes it passes once you pay a nominal option fee. This can look like a subscription, but economically it’s closer to buying an asset with finance.

Where the arrangement is more like a financed purchase, businesses often treat the device as an asset rather than expensing all monthly payments as if they were rent. Instead, the asset is recorded at its cost, and you claim depreciation (or any allowable capital relief) over time. The monthly payments may then be split between repayment of principal and any finance charge, if the agreement provides that information.

This can feel more complicated, but it’s also more accurate if, in substance, you are acquiring an asset. If your paperwork (contract and invoices) indicates it’s a credit agreement or hire purchase arrangement, treating it like a rental expense can cause problems later.

Model 3: Bundled hardware + service contract (connectivity plans, managed services, “all-in” bundles)

Phone contracts are the classic example: you pay monthly and the handset is “included,” but the plan includes connectivity and the device cost. Some providers separate the device cost from airtime; others bundle it into one fee. Business broadband packages can also bundle routers, extenders, installation, and support.

What you can claim is often tied to what you can evidence. If your provider gives separate line items (device repayment vs service), it’s easier to treat each part appropriately. If everything is bundled, it may still be claimable, but you need to be consistent and sensible about how you classify it in your accounts.

Practically, many small businesses treat a blended phone contract as a business expense, then adjust for personal use if needed. But for higher-cost hardware bundles, or if the contract looks like finance, you may need to consider whether a portion should be treated as an asset.

Model 4: Hardware subscription with upgrade rights

Some subscriptions let you upgrade annually or swap devices when new models arrive. Often you return the old device and start the new term. This looks and behaves like renting with ongoing service. If you never own the device (or ownership is not economically meaningful), it’s often treated like an operating expense.

The tricky point is if the contract includes an option to buy the device at a reduced price at the end. If you regularly take that option and end up owning the hardware, your pattern of use might look more like purchasing over time rather than renting. That doesn’t automatically mean you can’t claim it; it simply affects how you present it in accounts and which rules apply.

Business use versus personal use: apportionment that makes sense

If hardware is used wholly for business, the logic is clean: the relevant subscription costs (or depreciation, depending on model) are business expenses. Mixed-use hardware is common, though—especially for phones and laptops.

A workable approach to apportionment should be:

Reasonable: It should reflect reality, not a convenient number.

Consistent: You should apply the same method month-to-month, unless something changes.

Supportable: If asked, you can explain how you arrived at the business-use percentage.

For phones, business use can be estimated based on call/text/data records over a sample period, or a documented “typical month” method. For laptops, it can be based on who uses it and why, or time-based allocation (for example, business hours vs personal hours). The more mixed the use, the more beneficial it is to keep a short written note explaining your allocation. You don’t need a novel; you need a clear rationale you can stand behind.

Capital vs revenue: when hardware becomes an asset rather than an expense

One reason subscription plans create confusion is that hardware sits on the border between day-to-day costs and longer-term assets. Many businesses treat low-cost equipment as an immediate expense because it’s simpler, while more expensive equipment is capitalised and depreciated. Subscription plans can blur those thresholds.

If you are truly renting hardware (never owning it), it is typically more like a revenue expense: you pay for use, you expense the payment. If you are buying the hardware over time, it is typically more like a capital item: you record an asset and claim depreciation or relevant capital allowances as permitted.

In practical terms, you can often tell which side you’re on by reading the contract and asking: “Is the provider selling me the device, or selling me access to the device?” If you’re unsure, look for ownership language, purchase options, and whether there is an explicit cash price for the device separate from the service.

How to treat the monthly payments in your bookkeeping

Even without diving deep into technical rules, you can improve accuracy by capturing subscription-plan details properly in your books.

Step 1: Split what you can

If your invoice separates hardware from services, record them separately. Services may include support, connectivity, insurance, extended warranty, and software. Hardware may be shown as a device repayment, lease fee, or equipment charge. This split is useful later if you need to justify what portion relates to equipment versus recurring services.

Step 2: Decide whether the hardware element is an expense or an asset

If the contract is rental/lease-style with no meaningful ownership, the hardware-related fee can often be recorded as an expense (and then apportioned for business use if needed). If it’s a purchase over time, consider recording an asset at the start and then treating payments as repayments plus any finance cost.

Small businesses sometimes default to expensing monthly fees because it mirrors cash flow. That can be acceptable in some contexts, but it can also misstate profits if it doesn’t reflect the substance of the arrangement. When the hardware value is significant, it’s worth treating it carefully.

Step 3: Keep the contract with the invoices

Invoices show amounts; contracts show meaning. Subscription plans can look the same on a bank statement whether they are rental, finance, or bundled services. Saving the contract (or order confirmation) alongside invoices helps demonstrate what you were paying for.

VAT or sales tax considerations for subscription hardware

Indirect taxes can be a big part of the cost and are often treated differently from the underlying expense. Whether you can recover VAT (or similar taxes) depends on your registration status and the rules in your jurisdiction, as well as whether the costs are business-related and properly invoiced.

Subscription plans can introduce additional complications, particularly when hardware and services are bundled. Sometimes VAT is charged differently on the device portion compared to the service portion, or the invoice may not be detailed enough for clean input tax recovery. If you are registered for VAT and the invoices are compliant, you may be able to reclaim the VAT attributable to business use, but mixed-use again can require an adjustment.

If you’re not VAT-registered, VAT is typically just part of your cost. Either way, your invoices matter. A missing VAT invoice or an invoice in the wrong name can turn a reclaim into a headache.

Subscriptions purchased personally but used for business

Another common scenario is: you took out the subscription in your personal name (or on a personal card), but you use the hardware for business. Whether you can claim it depends on business structure and the evidence you can provide.

If you are a sole trader, personal and business are often intertwined in practical terms, but you still need to show that the cost was incurred for business purposes. If you operate through a company, personal subscriptions used for company business can raise additional issues, such as whether the company is reimbursing you, whether it should be treated as a benefit, and whether it is properly documented as a business cost.

Best practice is to have subscriptions in the business name where possible, paid from a business account, with invoices addressed correctly. If that’s not possible, keep excellent records: invoices, proof of payment, and a short note explaining the business purpose and the business-use percentage.

What about partial months, upgrades, returns, and early termination fees?

Subscription plans are rarely “set and forget.” Here are the real-world events that can change how you claim the cost.

Upgrades and swaps

If you upgrade mid-term and the provider replaces the device, keep records showing what happened to the old hardware (returned, bought out, or written off). If your treatment is “monthly expense,” this might simply continue. If you capitalised the asset, you may need to consider what happens to the old asset value when it is returned or replaced.

Returns and cooling-off cancellations

If you cancel early and receive refunds or credits, your claim should reflect the net amount you actually paid. Keep credit notes and cancellation confirmations. Don’t rely on memory—subscription providers often issue adjustments across multiple bills.

Early termination fees

Breaking a contract can trigger fees that represent remaining payments, device buyout amounts, or penalties. The nature of the fee matters. A fee that is essentially paying off the device might be treated differently from a pure penalty. At a minimum, keep the provider’s explanation of the fee.

Damage and replacement

Many subscriptions include damage cover or replacement. If you receive a replacement device, keep the paperwork. The replacement itself might not be an “extra expense,” but it may affect your asset register if you capitalised the original device. If you pay an excess, that excess is often treated as a business cost (again, apportioned for personal use if relevant).

Common claimable items within hardware subscriptions

Even when the hardware element is tricky, many related costs are straightforwardly business-related when used for business:

Connectivity and data: phone plans, mobile data, broadband bundles.

Support and maintenance: managed IT service components, helpdesk subscriptions, device management.

Insurance and extended cover: protection plans, accidental damage cover, theft cover.

Accessories and add-ons: chargers, docking stations, external monitors, cases.

Security services: endpoint protection tied to the device subscription.

The rule of thumb is: if the cost is incurred wholly and exclusively for business, it is more clearly claimable. Mixed use, personal benefit, and ownership structure complicate the picture.

Documentation: what you should keep to support your claim

Good records are what turn “I think this is claimable” into “I can prove this is claimable.” For subscription-plan hardware, keep:

Invoices (every month): not just bank statements.

The contract or order confirmation: showing whether it’s rental, finance, or an instalment purchase, plus end-of-term options.

Proof of payment: bank or card statements that match invoices.

Business-use rationale: a short note on how you calculated business percentage if there’s personal use.

Asset register entries (if applicable): if you capitalise hardware, record serial numbers, start dates, and disposal/return details.

Any changes: upgrade confirmations, cancellation emails, credit notes, and revised schedules.

If you ever need to explain your claim, it’s far easier with a tidy folder of documents than a patchwork of screenshots and memory.

How different business structures may approach claims

The way you claim expenses can vary depending on whether you are a sole trader, partnership, or limited company. The principles are similar—business purpose, reasonable apportionment, and correct categorisation—but the mechanics can differ.

Sole traders

Sole traders often claim allowable business expenses directly against business income. If a laptop subscription is used 80% for business, you might claim 80% of the relevant payments or depreciation, depending on the nature of the contract.

Limited companies

Companies must consider whether the company is the customer on the contract and whether the equipment is provided to an employee or director. If a device is used personally, you may need to consider whether that personal use creates an additional reporting issue. The cleanest setup is often: contract in the company name, invoices to the company, paid by the company, with usage policies that clarify business use.

Partnerships

Partnerships usually sit somewhere between. Ensure the partnership is the contracting party if the hardware is a partnership cost, and agree how mixed-use items are apportioned across partners.

Practical examples to show how claims might work

Example 1: Laptop on a device-as-a-service subscription

You subscribe to a managed laptop service for a fixed monthly amount, including the laptop, warranty, replacements, and support. You return the laptop at the end of the term and never own it. You use it 100% for business.

In this scenario, many businesses treat the monthly payments as an operating expense. Your key evidence is the contract indicating it is a service subscription with return obligations and no ownership transfer.

Example 2: Phone contract with a bundled handset

You have a mobile contract that provides a handset and monthly airtime/data. The invoice is a single blended fee. You use the phone roughly 70% for business calls and messages.

A common approach is to treat the monthly fee as a business expense and claim 70% (keeping a note explaining the percentage). If the provider offers an invoice breakdown, keeping it makes your position stronger.

Example 3: Tablet on a “0% finance subscription” that is really instalments

You take out a plan marketed as a subscription, but the agreement shows a cash price and a repayment schedule, with ownership passing to you once payments are complete. You use it entirely for client presentations.

Here, the arrangement looks like buying an asset over time. Many businesses would record the tablet as an asset and claim depreciation or allowable capital relief, while tracking payments as settling the liability. This is not about claiming less; it’s about claiming in a way that matches the underlying transaction.

Example 4: Gaming-grade PC used for business and personal

You take a high-cost PC on a monthly plan. You use it for video editing for your business, but also for personal gaming in the evenings. Business use is about 60%.

You can often claim the business portion, but you should be ready to justify that 60% with a simple method (time-based, usage-based, or a reasoned estimate). If the contract is a purchase arrangement, you may also need to treat it as an asset and claim the business-use portion of depreciation rather than simply expensing all payments.

Red flags that can cause problems

Subscription hardware claims can go wrong in predictable ways. Watch out for these common pitfalls:

Claiming 100% business use without support: especially for phones and laptops that clearly have personal use.

No proper invoices: bank statements alone don’t show what was supplied.

Ignoring ownership terms: treating a financed purchase as a rental expense can misstate your accounts.

Invoicing to the wrong entity: particularly when a company claims an expense billed to a director personally.

Double-claiming: expensing monthly payments while also recording the hardware as an asset and depreciating it.

Inconsistent treatment: changing your method without a reason can look careless.

How to decide the best approach for your situation

If you want a simple framework, work through these questions in order:

1) Is the hardware used for business? If not, don’t claim it.

2) Is there mixed use? If yes, choose a reasonable business-use percentage and document it.

3) Do you own the hardware? Check the contract. If you never own it, monthly payments are often an expense. If you do (or will), you may be looking at an asset/depreciation approach.

4) Is the fee split between hardware and services? If yes, record separately. If no, keep the contract and invoice descriptions and adopt a consistent method.

5) Is the cost material? The larger the amount, the more worthwhile it is to get the treatment right and keep detailed records.

Best practices to make claiming straightforward

To make future you happy, adopt these habits:

Put the contract in the business name where possible.

Pay from a business account to keep audit trails clean.

Download invoices monthly rather than relying on provider portals later.

Track devices like assets when appropriate (serial numbers, start dates, returns).

Write a one-paragraph business-use note for mixed-use items.

Review annually to ensure your method still reflects reality—especially if your usage changes.

Frequently asked questions

Can I claim the full monthly subscription fee as an expense?

Often you can claim the business portion of the monthly fee, but whether you can claim the full amount depends on whether the device is used wholly for business and whether the payment is genuinely for a service/rental or is actually paying off an asset purchase. If there is personal use, you generally need to reduce the claim accordingly.

If I’m buying the device over time, do I still claim the monthly payments?

You can still claim costs, but the claim may be through depreciation or other allowable capital treatment rather than expensing the full monthly amount as a rental. Any service elements in the monthly payment may still be expensed as they arise.

What if the invoice doesn’t show a device cost separately?

You can still claim business-related costs, but you’ll need to rely more on the contract terms and invoice descriptions to support your treatment. Keeping the contract is especially important when invoices are blended.

Does it matter if I buy add-ons like insurance or extended warranty within the subscription?

Those add-ons are usually easier to treat as ongoing expenses, provided they relate to business use. If the device itself is mixed-use, you may need to apportion those add-ons as well.

What if I use the device for business now, but later it becomes personal?

Your claim should reflect the period and proportion of business use. If business use drops over time, update your apportionment. For assets, this can mean adjusting the business-use percentage used for depreciation going forward.

Final thoughts

Yes, you can often claim expenses for business-related hardware bought on subscription plans—but you’re really claiming the business cost of what the subscription represents. If it’s a true rental/service subscription, the monthly fee is commonly treated as an operating expense. If it’s an instalment purchase in disguise, the hardware may need to be treated as an asset with depreciation, while service components remain deductible as they arise. Mixed personal use usually means you can claim only the business portion, and your records are what make that claim credible.

The safest path is to read the contract, separate device and service elements where possible, be consistent in your bookkeeping, and keep clean documentation. If the sums are significant or the contract terms are unclear, getting tailored advice can save you from headaches later—and can also prevent you from missing out on relief you were entitled to claim.