Can I claim expenses for business-related SaaS tools I use daily?

Understanding what “claiming SaaS expenses” really means

If you use business software every day—project management tools, accounting platforms, CRM systems, design suites, email marketing services, AI writing assistants, cloud storage, password managers—it’s natural to ask: can I claim those costs as business expenses? In many cases, yes. But the correct answer depends on how your business is structured, where you pay tax, how the tool is used, and whether the cost is incurred “wholly and exclusively” for business (or the equivalent standard in your jurisdiction).

When people say “claim expenses,” they usually mean one of two things:

First, they mean deducting the cost from business income to reduce taxable profit. This is the most common scenario: you pay for a SaaS subscription, record it in your books as a business expense, and it reduces your profit (and therefore the tax you pay on profit), assuming it qualifies.

Second, they mean reclaiming sales tax such as VAT or GST on the subscription. That’s a different mechanism from an income tax deduction. Some businesses can reclaim VAT/GST if they are registered and the purchase is used for taxable business activities. Whether you can reclaim, and how, depends heavily on your registration status and the place-of-supply rules for digital services.

In short: “Can I claim SaaS expenses?” often means “Can I deduct them from profit?” and sometimes also means “Can I reclaim VAT/GST?” Both are possible for many businesses, but the details matter.

Why SaaS tools are usually treated as ordinary business expenses

SaaS stands for “Software as a Service.” You typically pay monthly or annually for access to a platform rather than buying a one-time perpetual license. From an accounting and tax perspective, recurring subscriptions used to run the business are often treated like other running costs: telephone, internet, office software, and professional services.

In many tax systems, routine software subscriptions are deductible as revenue expenses because they are incurred to generate income and keep the business operating. A bookkeeping subscription helps you maintain records; a CRM helps you manage leads; a scheduling tool helps you deliver services; a video conferencing platform helps you meet clients; a code repository helps you build products. These are all “ordinary and necessary” or “wholly and exclusively for business” in the way that rent, utilities, and stationery might be.

The key idea is that the SaaS cost is tied to business activity. If you’d still pay for the tool even if you weren’t running the business, that’s a sign it may be personal or mixed-use. If the tool exists because of the business—and the business would struggle without it—that’s a sign it’s business-related.

Eligibility basics: what tax authorities typically look for

Although wording differs by country, tax authorities generally care about these factors when deciding whether an expense is deductible:

Business purpose: The cost must have a clear connection to your business activities. A tool used to perform your work, manage customers, or handle operations is easier to justify than something loosely connected.

Wholly business vs mixed use: If a subscription is used partly for personal reasons, you may need to claim only the business portion. Mixed-use is common with cloud storage, communication tools, and creative software that might also be used personally.

Reasonableness: The cost should be reasonable for the type and size of your business. “Reasonable” doesn’t mean “cheap,” but you should be prepared to explain why the tool is needed. A high-end analytics platform might be reasonable for a marketing agency but less so for a casual hobby venture.

Evidence and records: You should be able to show invoices/receipts, payment confirmation, and a basic explanation of how the tool supports business activity. Good records are often more important than people realize, especially if you are ever asked to substantiate deductions.

Correct categorisation: Claiming expenses isn’t just about whether something is allowed. It’s also about recording it properly: software subscriptions, professional services, office expenses, or IT costs. Proper categorisation keeps your accounts consistent and reduces headaches later.

Common SaaS categories you can often claim

Here are examples of business-related SaaS tools that many businesses legitimately claim, provided they are used for business purposes:

Accounting and bookkeeping: Bookkeeping platforms, invoicing tools, receipt capture apps, payroll services, and tax filing software.

Project management and collaboration: Task managers, kanban boards, documentation tools, chat platforms, and team file-sharing.

Sales, marketing, and customer success: CRM systems, email marketing, marketing automation, social media scheduling, analytics dashboards, customer support ticketing, and live chat.

Professional services delivery: Scheduling tools, client portals, video conferencing, e-signature platforms, and proposal software.

Creative and technical tools: Design platforms, prototyping tools, code hosting, monitoring, hosting dashboards, and subscription-based development environments.

Security and compliance: Password managers, endpoint security, identity management, and compliance reporting tools.

AI and productivity services: Transcription tools, language and writing assistants, automated meeting notes, knowledge-base indexing, and research summarisation services—again, assuming they are used for business tasks rather than personal use.

These categories are not guarantees. The deciding factor is still how you use the tool and whether it is genuinely part of your business operations.

Mixed-use subscriptions: how to claim fairly when personal use exists

Many people use the same subscription for both work and life. For example: a cloud storage plan that holds family photos as well as client files; an email platform used for personal newsletters and business campaigns; a design tool used for both client work and personal hobbies. In those cases, a “100% business” claim can be hard to justify.

A common approach is to apportion the expense based on a reasonable method. “Reasonable” might look like:

Usage-based apportionment: If 70% of your storage is business files and 30% is personal, claim 70% of the cost.

Time-based apportionment: If you use a tool about 4 days per week for business and 1 day for personal, you might claim 80% (4/5) of the cost.

Account separation: Sometimes the cleanest approach is to maintain separate personal and business accounts. That way, the business account is fully deductible, and the personal account is clearly not.

Whichever method you choose, consistency matters. Pick an approach you can explain, apply it consistently across periods, and keep a note describing your reasoning. If you ever need to defend the expense, a simple written explanation can be surprisingly helpful.

Freelancers, sole traders, and the “wholly and exclusively” idea

If you operate as a freelancer or sole trader, you’re often taxed on business profit: income minus allowable expenses. Tax authorities typically expect that allowable expenses are incurred wholly and exclusively for the purposes of the trade (or a similar standard). SaaS tools can fit nicely into that definition when they are genuinely business tools.

However, sole traders often run into mixed-use issues because they might use the same laptop, phone, and subscriptions across personal and business life. That doesn’t automatically prevent a claim; it just means you should claim the business portion rather than the full amount where personal benefit is significant.

It’s also worth thinking about the “dual purpose” problem. Some costs have a built-in personal element even if they help the business. For example, a general self-improvement subscription that you say helps you be a better entrepreneur might still be treated as personal. SaaS tools that are directly tied to business tasks—accounting, invoicing, CRM, time tracking—are usually easier to justify than subscriptions that primarily benefit you personally but happen to indirectly support business motivation or skills.

Limited companies: how SaaS claims often work when the company is separate

If you run a limited company (or similar corporate structure), the company is a separate legal entity from you. This changes the framing: the company pays for software it needs to operate, and those costs reduce company profit.

But the separation can introduce different complications:

Who pays? Ideally, the company pays directly from its bank account. If you pay personally and claim reimbursement, keep clear records and have the company reimburse you properly.

Personal benefit and benefits-in-kind: If the company pays for a subscription that is essentially personal or provides substantial private benefit, there may be tax consequences for you as an individual (depending on local rules). A business-only SaaS tool used in your role is generally fine; a subscription primarily for personal enjoyment is not.

Subscriptions in your own name: Some services are tied to individuals rather than companies. That’s not necessarily a problem, but documentation should still show that the company is the customer and that the subscription is used for business. If the tool can’t be transferred and looks personal, keep extra notes explaining the business necessity.

VAT/GST on SaaS: deducting the cost vs reclaiming the tax

It’s easy to confuse income tax deductions with VAT/GST recovery. They’re related, but not the same.

If you are VAT/GST registered, you may be able to reclaim the VAT/GST charged on SaaS subscriptions if they are used for business activities and you have valid invoices that meet the requirements. But digital services often involve cross-border rules. For example, you might buy software from a provider in another country, and the invoice may show VAT at 0% or use a reverse charge mechanism. In other cases, you may be charged local VAT based on your billing address, the supplier’s registration, or the place-of-supply rules.

From a practical standpoint, there are three common scenarios:

Domestic supplier charges VAT/GST: You pay it and reclaim it (if allowed) through your VAT/GST return.

Cross-border supplier does not charge VAT/GST and you apply reverse charge: You account for VAT/GST yourself according to your local rules and report it appropriately.

Supplier charges VAT/GST because of your location or status: This may happen if your VAT/GST number isn’t on file, or if the supplier’s system treats you as a consumer. Often you can update billing settings to include your tax registration number and receive a corrected invoice going forward.

Even if you can’t reclaim VAT/GST, you may still be able to deduct the gross cost (including VAT/GST) as an expense, depending on your system. If you can reclaim, you generally record the net expense and claim the input tax separately. The correct treatment depends on your local accounting rules and your VAT/GST position.

Subscriptions paid annually vs monthly: does it matter?

Most SaaS is billed monthly or annually. For tax purposes, the payment schedule usually doesn’t determine whether it’s deductible; it affects timing and accounting treatment.

Many small businesses use cash-basis accounting, where expenses are recorded when paid. In that case, paying annually means you record the whole payment at the time you pay (subject to local rules). Under accrual accounting, you typically match the expense to the period it relates to. That means an annual subscription might be recorded as a prepaid expense and then expensed month by month.

For everyday compliance, the most important thing is consistency and accuracy in your bookkeeping. Your accounting method (cash vs accrual) influences how you record the expense, but the underlying question—whether it’s a legitimate business cost—stays the same.

Capital vs revenue: is SaaS ever a “capital” expense?

People sometimes worry that software costs might be “capital” rather than “revenue,” meaning they can’t be deducted immediately and must be amortised or treated differently. With SaaS subscriptions, it is often a revenue expense because you are paying for access over time, not acquiring a long-term asset.

However, software-related spending can become more complex when you are not just subscribing, but also paying substantial one-time implementation costs, custom development, or multi-year commitments that create an enduring benefit. Examples include:

Implementation and onboarding: Large setup fees for an enterprise platform.

Customisation and development: Paying developers to build integrations or custom modules.

Long-term licenses: Certain software agreements might resemble an asset purchase.

In these cases, local rules may require some costs to be capitalised and amortised. That doesn’t mean you can’t claim them; it just means the deduction may be spread over time. If your SaaS spend includes large non-recurring components, it’s worth getting specific advice rather than assuming it’s identical to a simple monthly subscription.

How to document your SaaS expenses so they stand up to scrutiny

Most problems with expense claims come from poor records, not from the expense being inherently “not allowed.” Strong documentation doesn’t need to be fancy, but it should be complete.

Here’s what good SaaS documentation usually includes:

Invoices or receipts: Download invoices from the SaaS provider portal. Email receipts are better than nothing, but proper invoices are ideal.

Proof of payment: Bank or card statements showing the payment. This helps confirm the expense actually occurred.

Business purpose note: A short note in your bookkeeping system can be enough. For example: “Email marketing platform used for client newsletters and lead nurturing.”

Apportionment calculation (if mixed-use): A simple note explaining the business percentage and how you arrived at it.

Correct supplier details: Make sure invoices show your business name and address where possible, and include your VAT/GST number if relevant.

If you use an expense management app, attach PDFs of invoices to each transaction. If you don’t, keep a structured folder (for example, by year and month). The goal is to be able to find documentation quickly if you need it.

Practical examples: what claiming might look like day to day

Sometimes it helps to translate the rules into concrete scenarios. Here are a few realistic examples of how SaaS expenses might be treated.

Example 1: A consultant using a scheduling tool and video calls
You run client sessions via video and use a scheduling platform to book appointments. These costs are directly linked to delivering your service. You pay for them solely for client work, and there is minimal personal use. In many cases, you would claim 100% as business expenses.

Example 2: A creator using cloud storage for both client assets and family photos
You store large client video files but also keep personal media in the same account. If you estimate that 75% of storage relates to business projects, you might claim 75% of the subscription. Alternatively, you could create a separate business storage account and claim that in full.

Example 3: A small e-commerce brand using email marketing and analytics
Your marketing automation platform and analytics tools are used to drive sales and manage customer data. These are typically core business tools. You would likely claim them in full, assuming they’re not used personally.

Example 4: A founder paying personally for a company tool
You accidentally set up a subscription on your personal card. The expense is still for business, but you should record it properly: either have the company reimburse you (and keep the invoice in the company records) or treat it as a director’s loan/expense claim depending on your local framework.

What about AI tools and “content” subscriptions used in business?

Many modern businesses use AI-based SaaS tools daily—for drafting emails, generating outlines, summarising meetings, translating documents, or assisting with coding. From an expense perspective, the same logic applies: if the tool is used for business tasks and is purchased for the purpose of running the business, it may be deductible.

However, AI tools can blur the line between business and personal more easily than, say, accounting software. If you use the same AI subscription for client work and personal projects, you may need to apportion. If you use it primarily for entertainment, personal learning, or hobbies, claiming it as a business expense may be harder to support.

A helpful habit is to treat AI tools like any other productivity software: document what you use it for (for example, “drafting client proposals and summarising meeting notes”), keep invoices, and separate personal use where possible.

Red flags that can make SaaS claims risky

Some situations tend to create problems. That doesn’t mean you can’t claim anything, but you should be cautious and prepared to justify your approach.

Claiming 100% of a tool with obvious personal benefit: For example, a general entertainment subscription or a personal lifestyle app.

Subscriptions that look like personal development rather than business operations: Some learning platforms can be business-related, especially if they are directly tied to your current trade. But vague claims like “it makes me better at business” can be challenged.

No invoices or unclear supplier documentation: If you can’t produce evidence of what you bought and when, it becomes difficult to support the claim.

Tools unrelated to your actual business activity: A subscription should make sense in the context of what you do. If you run a local service business, an expensive enterprise DevOps monitoring tool might raise questions unless you can explain the connection.

Inconsistent treatment: Claiming a tool one year but not another without reason, or changing the percentage claimed without explanation, can create confusion. Consistency makes your position more credible.

How to decide whether to claim: a simple self-check

If you’re unsure whether a daily SaaS subscription is claimable, run through a quick self-check:

1) Would I still pay for this if I stopped trading tomorrow?
If you’d cancel it immediately, that suggests it’s primarily business.

2) Does this tool directly help me earn revenue, deliver work, or run operations?
Direct links to work are easier to defend than indirect “nice to have” benefits.

3) Is there meaningful personal use?
If yes, consider apportionment or a separate account.

4) Can I produce an invoice and show payment?
If not, fix your recordkeeping first.

5) Does the expense match my business reality?
If it’s unusual or large relative to your turnover, keep extra notes explaining why it’s needed.

This self-check won’t replace professional advice, but it helps you avoid the most common mistakes.

Bookkeeping tips: keeping SaaS expenses tidy all year

SaaS is easy to accumulate. Ten small monthly subscriptions can quietly become a significant annual cost. Keeping them organised helps both tax compliance and business decision-making.

Create a dedicated category: Many accounting systems have a “Software subscriptions” or “Computer software” category. Use it consistently.

Track renewals: Annual plans can surprise you. A simple list of subscriptions with renewal dates helps you budget and avoid unnecessary spend.

Keep invoices automatically: Many SaaS providers let you auto-email invoices to your bookkeeping address. Alternatively, download them monthly or quarterly.

Note business purpose once: In your accounting system, add a short description to recurring transactions so you don’t have to remember later why the tool was needed.

Review usage: From a tax perspective, unused subscriptions are still an expense, but from a business perspective, they might be waste. A quarterly “software audit” can save real money.

International businesses and remote work: extra wrinkles to consider

If you work with clients across borders or travel frequently, SaaS can create extra complexity:

Different billing locations: Some providers apply tax based on your billing address. If your address changes or you have multiple entities, ensure the billing profile matches the entity claiming the expense.

Multiple currencies: Record the expense in your base currency using the exchange rate applied by your bank or an accounting-approved method. Keep the original invoice for reference.

Digital services taxes and VAT/GST rules: Some jurisdictions have specific rules for digital services. For VAT/GST-registered businesses, having the correct tax registration number on file is especially important.

Shared subscriptions in a distributed team: If your team shares a tool, it’s generally a straightforward business expense. Just ensure the business pays for it and the invoices reflect the business details where possible.

When it’s worth getting professional advice

For many people, claiming business SaaS expenses is routine. But certain situations justify getting tailored advice:

High spend or enterprise contracts: Large setup fees, multi-year agreements, or significant customisation can change the accounting treatment.

Complex mixed-use: If you can’t reasonably separate personal and business use, you may need a defensible apportionment strategy.

Corporate structures and personal benefit: If the company pays for tools that you also use personally, you may need to consider any personal tax implications.

VAT/GST uncertainty: Cross-border SaaS and reverse charge rules can be confusing. A small mistake repeated across many subscriptions can add up.

Getting clarity early can prevent stress later—especially if you’re scaling up or being more closely scrutinised due to higher income.

Key takeaways for claiming SaaS tools you use daily

In many cases, business-related SaaS subscriptions are legitimate, claimable expenses. The most important factors are business purpose, evidence, and the handling of any personal use. If a tool is essential to how you operate—managing clients, producing work, marketing, collaborating, securing data, or keeping accounts—there’s a strong chance it can be claimed in some form.

The biggest mistakes are usually practical rather than technical: claiming 100% of mixed-use tools without justification, failing to keep invoices, recording expenses inconsistently, or confusing income tax deductions with VAT/GST recovery.

If you keep clean records, pay through the correct entity, and apply a reasonable approach to mixed-use subscriptions, you’ll be in a much stronger position. And beyond tax, the process of reviewing SaaS spend often helps you run a leaner, more intentional business—so the effort pays off twice: once in compliance and once in efficiency.