Can you claim software subscriptions as a freelancer? Monthly and yearly plans, plans paid ahead and shared use under the IRS, HMRC and CRA rules (US, UK, Canada)

Design apps, accounting software, cloud storage, video calls, scheduling tools: most freelancers pay for several online services every month or every year. Here's what the IRS, HMRC and the CRA say about claiming those plans, how they differ from software you buy outright, which tax year a plan paid ahead belongs to, what to do about a plan you also use personally, and what to keep.

General information, not tax, legal or accounting advice. Not written or reviewed by a lawyer or an accountant. The short answer, the side-by-side summary, the steps, the checklist, the wording to copy and all the other wording are ours; the official items come from the US, UK and Canadian government pages linked below. This page is about a self-employed person (a sole proprietor or sole trader) paying for software plans and online services. It doesn't tell you whether a particular plan counts, what share of it is business, which tax year a payment belongs to, or which line or box applies to you, and it doesn't cover buying software outright, building a website, software you make to sell, employees, companies, sales tax, VAT or GST/HST, US states, Canadian provinces, Quebec, or other countries. Rules change; check the current official pages before you claim. Official pages were read on 2026-10-20.

The short answer

1. US: the instructions for the business schedule say "You can deduct technology and software tools that are ordinary and necessary expenses directly related to operating your business. Generally, this will include tax preparation software and subscription services paid to manage your business." They also say "However, you can’t deduct technology or software tools that must be depreciated or amortized. Most computer software expenses must be capitalized and depreciated or expensed under section 179."
2. UK: GOV.UK's office costs include "computer software if your business makes regular payments to renew the licence (even if you use it for more than 2 years)" "You can only claim allowable expenses for the business costs."
3. Canada: no CRA page we read names software plans, but "Generally, you can deduct any reasonable current expense you incur to earn business income." The CRA's test for current or capital costs says "A current expense is one that usually recurs after a short period."
4. Paid a year ahead? All three tax offices have timing rules for costs you pay in advance, and they differ; see sections two, four and six.
5. Bought outright? A one-off software purchase follows different rules; our guide to buying equipment as a freelancer covers them.

On this page

• 1. United States: subscription services and software tools
• 2. United States: plans paid ahead and software you buy
• 3. United Kingdom: software you pay for regularly
• 4. United Kingdom: HMRC's manual, cash basis and plans paid ahead
• 5. Canada: a recurring current expense
• 6. Canada: plans paid ahead
• 7. Side by side
• 8. Step by step
• 9. Wording to copy
• 10. Checklist
• Free tools and kits
• Where the sources differ
• When to get advice
• Related
• Sources

1. United States: subscription services and software tools

• The general rule: "To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business." (IRS: Publication 334 (2025), Tax Guide for Small Business, page date 30-Apr-2026).
• Where they go: under Part V. Other Expenses. Line 48, the instructions say "Include all ordinary and necessary business expenses not deducted elsewhere on Schedule C. List the type and amount of each expense separately in the space provided." Under Technology and software tools. "You can deduct technology and software tools that are ordinary and necessary expenses directly related to operating your business. Generally, this will include tax preparation software and subscription services paid to manage your business." "However, you can’t deduct technology or software tools that must be depreciated or amortized. Most computer software expenses must be capitalized and depreciated or expensed under section 179." (IRS: Instructions for Schedule C (Form 1040) (2025), page date 30-Apr-2026).
• Business and personal use: "If you have an expense that is partly for business and partly personal, separate the personal part from the business part." "The personal part is generally not deductible."
• Tax filing software: the small business publication has its own sentence for it: "Under section 62(a), you can deduct ordinary and necessary expenses paid for business software technology resources for filing taxes, for example, professional tax filing software, if it’s not depreciated or expensed under section 179. Its use must not exceed 1 year. The expenditure is deductible if used exclusively for the business. If used for both personal and business purposes, only deduct the portion of the software you use for the business."
• An older publication: the IRS page for its former business expenses publication says "We have discontinued Publication 535, Business Expenses; the last revision was for 2022." (IRS: Publication 535, Business Expenses, page date 27-Jun-2026). Older articles that cite it may be out of date.

For the schedule itself, see Schedule C for US freelancers.

2. United States: plans paid ahead and software you buy

• When you pay: "Under the cash method, you generally deduct expenses in the tax year in which you actually pay them." "You can deduct an expense you pay in advance only in the year to which it applies." The publication's example: "You are a calendar-year taxpayer and you pay $1,000 in 2025 for a business insurance policy effective for 1 year, beginning July 1. You can deduct $500 in 2025 and $500 in 2026."
• The twelve-month rule: an older edition of the accounting methods publication says "An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule." "Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following."
  • 12 months after the right or benefit begins, or
  • The end of the tax year after the tax year in which payment is made.
  "If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must obtain approval from the IRS before using the general rule and/or the 12-month rule." Its example: "You are a calendar year taxpayer and pay $10,000 on July 1, 2021, for a business insurance policy that is effective for only 1 year beginning on July 1, 2021. The 12-month rule applies. Therefore, the full $10,000 is deductible in 2021." (IRS: Publication 538 (01/2022), Accounting Periods and Methods, page date 30-Apr-2026). See "Where the sources differ" below before relying on this.
• Software you buy rather than rent: the depreciation publication says "If you can depreciate the cost of computer software, use the straight line method over a useful life of 36 months." "Off-the-shelf computer software is qualifying property for purposes of the section 179 deduction. This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified." (IRS: Publication 946 (2025), How To Depreciate Property, page date 30-Apr-2026). Our equipment guide covers depreciation, first-year options and the records to keep.

Which accounting method you use matters here; see cash vs accrual accounting for freelancers.

3. United Kingdom: software you pay for regularly

• Office costs: GOV.UK's list of costs you can claim includes "office costs, for example stationery or phone bills" (GOV.UK: Expenses if you're self-employed, page date 2024-11-08). Its office costs part says "You can claim expenses for costs such as:" and ends the list with
  • computer software your business uses for less than 2 years
  • computer software if your business makes regular payments to renew the licence (even if you use it for more than 2 years)
  "Claim other software for your business as capital allowances, unless you use cash basis." "If you’re not sure whether a business cost is an allowable expense contact HM Revenue and Customs (HMRC)." (GOV.UK: Expenses if you're self-employed, office, property and equipment, page date 2024-11-08).
• Business and personal use: "You can only claim allowable expenses for the business costs."
• On the return: the notes for the full self-employment pages say, under Box 23 Phone, fax, stationery and other office costs, "This includes phone and fax running costs, postage, stationery and printing costs, small office equipment and computer software (if under 2 years old). If you include the non-business or private use proportion of these expenses, you’ll also need to put that part of the expense in box 38." (HMRC: Self-employment (full) notes, Tax year 6 April 2025 to 5 April 2026 (2025–26), PDF). If you use the short pages or give one total for expenses, check the notes for how to show any private part.
• Not the same as journals: GOV.UK's separate heading for "subscriptions, for example subscriptions to trade or professional journals" is about publications and professional bodies; our training costs guide covers those.

Software you buy with a one-off payment and keep using for years falls under capital allowances unless you use cash basis; our equipment guide covers both. For the return as a whole, see UK Self Assessment for freelancers.

4. United Kingdom: HMRC's manual, cash basis and plans paid ahead

• Regular payments or a lump sum: HMRC's internal manual for its staff says "Computer software is usually acquired under licence, payment for which may take the form of regular amounts or a lump sum." (HMRC: BIM35801 - Capital/revenue divide: computer software: introduction, page date 2016-04-01).
• Regular payments: the manual says "An article on the treatment of computer software expenditure on or after 10 March 1992 was published in Tax Bulletin 9F (November 1993), and is reproduced below." Under Regular payments akin to a rental, it says "Payments of this kind are revenue. The timing of deductions is governed by correct accounting practice which normally requires the rentals to be spread over the useful life of the software in accordance with the accruals basis" For a lump sum, it says "where software is expected to have a useful economic life of less than two years Inspectors will accept that the expenditure is revenue." (HMRC: BIM35805 - Capital/revenue divide: computer software: Tax Bulletin article, page date 2022-12-07).
• Timing under the manual: "The timing of relief follows generally acceptable accounting practice whereby expenditure is charged against profits over the shorter of the useful life of the asset or the term of the licence" It also tells staff "But you should not accept that a particular piece of software has such a limited life solely because updates appear at frequent intervals." (HMRC: BIM35810 - Capital/revenue divide: computer software: general considerations, page date 2016-04-01).
• Cash basis: "Cash basis accounting is the standard way to record your income and expenses if you’re a sole trader or partnership without corporate partners." "With cash basis you only record income or expenses when you receive money or pay a bill." "With traditional accounting you record income and expenses by the date you invoiced or were billed." (GOV.UK: Cash basis, page date 2021-07-21). On recording expenses: "Only count the expenses you’ve actually paid." (GOV.UK: Cash basis, how to record income and expenses, page date 2021-07-21).

Our reading: under cash basis, a plan counts when you pay for it; under traditional accounting, a plan paid ahead may need to be spread, so ask an accountant. See cash vs accrual accounting for freelancers.

5. Canada: a recurring current expense

• The general rule: "Generally, you can deduct any reasonable current expense you incur to earn business income." "However, since you cannot deduct personal expenses, enter only the business part of expenses on the Form T2125, Statement of Business or Professional Activities." "In addition, you cannot claim expenses you incur to buy capital property." (CRA: Expenses section of Form T2125, page date 2026-08-31).
• Current or capital: "A current expense is one that usually recurs after a short period." By contrast, "A capital expense generally gives a lasting benefit or advantage." (CRA: Current or capital expenses, page date 2026-08-31).
• Which line: no CRA page we read names software plans or a line for them. The other expenses page says "Enter on line 9270 the total of other expenses you incurred to earn income, as long as you did not include them on a previous line. You have to list these expenses on the form." (CRA: Other business expenses, page date 2026-08-31). The office expenses line is narrower: "You can deduct the cost of office expenses that are generally not related to your workspace. These include small items such as:"
  • pens
  • pencils
  • paper clips
  • stationery
  • stamps
  (CRA: Line 8810 – Office expenses, page date 2026-08-31).
• Not the same as publications: the memberships line says "You can also deduct annual dues or fees to keep your membership in a trade or commercial association, as well as subscriptions to publications." (CRA: Line 8760 – Business taxes, licenses, and memberships, page date 2026-08-31). Our training costs guide covers those.

Software you buy outright is covered by capital cost allowance; our equipment guide covers the classes. The expense lines sit in the expenses part of your statement of business or professional activities: see our guide for Canadian freelancers.

6. Canada: plans paid ahead

• Prepaid expenses: "A prepaid expense is an expense you paid for ahead of time." "Under the accrual method of accounting, claim the expense you prepay in the year or years in which you get the related benefit." The CRA's example: "On June 30, 2025, you prepay the rent on your building for a full year (July 1, 2025, to June 30, 2026). You can only deduct one-half of this rent as an expense in 2025. You can deduct the other half as an expense in 2026."
• Under the cash method: "Under the cash method of accounting, you cannot deduct a prepaid expense amount (other than for inventory) relating to a tax year that is two or more years after the year the expense is paid. However, you can deduct the part of an amount you paid in a previous year for benefits received in the current tax year." (CRA: Prepaid expenses, page date 2026-08-31).
• The guide: "If you use the cash method of reporting income and expenses, you can only deduct expenses you paid in the year. If you are using the accrual method, you can deduct expenses you had during the year, whether you paid them or not. There are special rules for deducting prepaid expenses." (CRA: Guide Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 3 – Expenses, page date 2026-04-16).

Which method you can use is covered in cash vs accrual accounting for freelancers.

7. Side by side

Our summary of sections one to six, not official wording.

8. Step by step

Our order of steps, based on sections one to six — not an official checklist.

1. List every software plan, app and online service you pay for, with how often you pay and the date it renews.
2. Mark which ones you use only for the business and which you also use personally, such as a family or personal plan.
3. For a shared plan, work out a reasonable business part and write down how you did it.
4. Separate plans you rent from software you buy outright with a one-off payment; for the second kind, use the rules in our equipment guide.
5. For a plan you pay a year or more ahead, note the period it covers and check which tax year or years it belongs to under the method you use.
6. Check which line or box your tax office uses for these costs, and keep the same choice from year to year.
7. Keep each invoice or receipt and the account’s billing history with your records.
8. Review the list when plans renew, cancel the ones you no longer use for work, and ask the tax office or an accountant if you’re unsure.

9. Wording to copy

Fill in everything in [brackets]. This is ours, not from any agency, and it's not tax, legal or accounting advice. It doesn't take the place of the invoices and records your tax office may ask for.

A list of your plans for your files

Software and subscriptions list (my own records, not an official document)
Tax year: [year or period]
Service: [name], provider [name], account in the name of [name]
Billing: [monthly / yearly / other], renews on [date]
Paid in the year: [amount], period covered by each payment: [start date] to [end date]
Used only for the business: [yes / no]
If shared, business part: [share], worked out by [method]
Bought outright instead of a plan: [no / yes, see my equipment records]
Line or box used: [line or box]
Invoices and billing history kept at: [where]

A question to your accountant before you claim

Hi [accountant's name],

I pay for these software plans and online services for my business: [list, with monthly or yearly billing]. [If shared: I also use [service] personally, and I worked out my business part as [share] by [method].]

[If paid ahead: I paid for [service] for [period] on [date], so the plan runs into my next tax year.]

Could you tell me whether these count as business expenses, which tax year the plans paid ahead belong to under the method I use, which line or box they go on, and what I need to keep? I've attached the invoices.

Thanks,
[your name]

10. Checklist

Our summary of the official pages above, not an official checklist.

• Every software plan and online service you paid for in the year
• How often each one bills and the period each payment covers
• Which are used only for the business and which are shared
• Your business part of each shared plan, and how you worked it out
• Any plan paid a year or more ahead, and the tax years it covers
• Software bought outright kept apart and handled under the equipment rules
• Invoices, receipts and billing history kept
• The line or box you used on your return
• Anything you’re not sure about, checked with the tax office or an accountant

Free tools and kits

• Our free expense tracking guide shows a simple way to keep business cost records, with a software and subscriptions category.
• Our free expense and receipt log keeps the details for each payment.
• A tool you pay for only for one client's project? See charging clients for expenses.
• Our paid Freelance Billing Kit by Small Rows (US$12, one-time) can log each payment: the Expenses tab has a date, a category, a description, the amount paid and a "Deductible? (your call)" column, and the category drop-down lets you pick Software & subscriptions from the kit's own list or type your own. Each row counts in full in the year of its date, so if a plan you paid ahead has to be spread over two tax years, enter each year's part as its own row. It doesn't track renewals, work out a business share, decide which line or box applies, store invoices or file anything.
• All three kits together: the All-Kits Bundle by Small Rows (US$24, one-time).

Where the sources differ

• Subscription or purchase in the US: the instructions name subscription services among deductible software tools but also say most computer software costs must be capitalized, and they don't say where one ends and the other begins. Our reading is that a plan you pay for to keep using a service for a period is the subscription case, while a one-off licence you keep is a purchase; ask an adviser if a plan looks like an instalment on software you will own.
• A plan paid ahead in the US: the current small business publication says to deduct a cost paid in advance only in the year it applies to, and its example splits a one-year policy across two years; the accounting methods publication, an edition from years ago, adds the twelve-month rule, under which its example deducts a one-year policy in full, and says you need IRS approval to start using these rules. Our reading is that the pages don't agree on a one-year plan that runs into the next year; ask an adviser before deducting it all at once.
• Tax filing software in the US: the small business publication's sentence on business software for filing taxes cites a different section and a use of no more than a year. Our reading is that this sentence is about tax filing software only; don't stretch it to other software.
• Two years in the UK: GOV.UK speaks of software your business uses for less than two years, the return notes of software under two years old, and HMRC's manual of an expected useful life under two years. Our reading is that the item on regular payments to renew a licence is the one that fits a subscription, whatever its age; check with HMRC if you pay a lump sum.
• Timing in the UK: HMRC's manual spreads regular licence payments under the accruals basis, while GOV.UK's cash basis pages say you record expenses when you pay a bill. Our reading is that the manual's spreading applies to traditional accounting; under cash basis, follow the cash basis pages.
• HMRC's manual: it is internal guidance for HMRC staff, its software pages carry page dates years old, and one of them reproduces a Tax Bulletin article from decades ago. Our reading is that GOV.UK's public pages are the starting point and the manual explains HMRC's approach; check with HMRC or an accountant.
• The word “subscriptions”: GOV.UK's subscriptions heading and the CRA's memberships line use it for journals, publications and professional bodies, not software plans, while the US instructions use it for subscription services. Our reading is that a software plan shouldn't go on a memberships line just because it is called a subscription.
• The line in Canada: the CRA pages we read don't name software plans or a line for them; the office expenses line lists small items such as stationery and stamps, and the other expenses line takes costs not included on a previous line. Our reading is that a recurring plan is a current expense, but the line isn't settled by these pages; ask the CRA or an accountant.
• Family and personal plans: none of the pages we read explain how to split a plan shared with family or used personally; they only say to separate or leave out the personal part. Our reading is that you should use a reasonable method you can explain, or keep a separate plan for the business.
• Page dates and editions: the IRS publications and instructions are the editions for the latest tax year except the accounting methods publication, which is older; GOV.UK's cash basis pages and HMRC's manual pages carry page dates years old. Our reading is that the rules above are current, but check the live pages and later editions before you file.
• What we did not check: buying software outright in detail (see our equipment guide); building or redesigning a website; software you develop or make to sell; free trials, refunds and plans billed in another currency; VAT, GST/HST and sales tax on digital services, including services bought from abroad; employees and companies; the short self-employment pages line by line; US state rules; Quebec and provincial rules; other countries' rules.

When to get advice

• you pay for a plan a year or more ahead and it runs into your next tax year;
• you pay a large one-off fee for a licence, or a plan looks like paying off software you will own;
• a plan is shared with family or used heavily for personal things;
• you use traditional accounting or the accrual method and aren't sure how to spread a payment;
• a client pays for a tool, or you charge a tool on to a client;
• you have a partner or a company, or you're registered for VAT, GST/HST or sales tax.

Talk to an accountant or a tax adviser in your country. This page is general information only.

Related

• Freelance expense tracking
• Schedule C for US freelancers
• UK Self Assessment for freelancers
• Canadian self-employment statement for freelancers
• Buying equipment as a freelancer
• Phone and internet bills

Sources

• United States: IRS: Instructions for Schedule C (Form 1040) (2025), page date 30-Apr-2026 · IRS: Publication 334 (2025), Tax Guide for Small Business, page date 30-Apr-2026 · IRS: Publication 538 (01/2022), Accounting Periods and Methods, page date 30-Apr-2026 · IRS: Publication 946 (2025), How To Depreciate Property, page date 30-Apr-2026 · IRS: Publication 535, Business Expenses, page date 27-Jun-2026
• United Kingdom: GOV.UK: Expenses if you're self-employed, page date 2024-11-08 · GOV.UK: Expenses if you're self-employed, office, property and equipment, page date 2024-11-08 · GOV.UK: Cash basis, page date 2021-07-21 · GOV.UK: Cash basis, how to record income and expenses, page date 2021-07-21 · HMRC: BIM35801 - Capital/revenue divide: computer software: introduction, page date 2016-04-01 · HMRC: BIM35805 - Capital/revenue divide: computer software: Tax Bulletin article, page date 2022-12-07 · HMRC: BIM35810 - Capital/revenue divide: computer software: general considerations, page date 2016-04-01 · HMRC: Self-employment (full) notes (Tax year 6 April 2025 to 5 April 2026 (2025–26), PDF)
• Canada: CRA: Expenses section of Form T2125, page date 2026-08-31 · CRA: Current or capital expenses, page date 2026-08-31 · CRA: Prepaid expenses, page date 2026-08-31 · CRA: Other business expenses, page date 2026-08-31 · CRA: Line 8810 – Office expenses, page date 2026-08-31 · CRA: Line 8760 – Business taxes, licenses, and memberships, page date 2026-08-31 · CRA: Guide Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 3 – Expenses, page date 2026-04-16

Checked 2026-10-20. Found a mistake? Tell us via Support.