The short answer: For most UK small businesses, an IT budget is mostly per-user running costs: managed IT support (our packages run from £30 to £90 per user per month), Microsoft 365 licences (£5.40 to £16.90 per user per month on an annual plan), plus device replacement, cyber security, internet and phones, and a contingency. For 2027, three changes are already known: analogue phone lines close on 31 January 2027, Windows 10 extended security updates double in price for year two, and Cyber Essentials assessments now automatically fail if multi-factor authentication is missing on cloud services that offer it. Build the budget from the bottom up, per person and per site, rather than as a percentage of turnover.
Last updated: 7 October 2026. Microsoft, Openreach, IASME and GOV.UK figures checked on that date. Prices exclude VAT.
In this guide
- What should an IT budget include?
- How much should a small business spend on IT?
- A worked example for a 15-person office
- What changes should you budget for in 2027?
- How to build your IT budget, step by step
- Budgeting for more than one site
- Annual or monthly: how billing affects the budget
- Tax relief on IT equipment
- Where to save without adding risk
- Frequently asked questions
What should an IT budget include?
A small business IT budget should cover everything you pay for to keep people working and data safe: support, software licences, devices, security, connectivity and phones, plus a contingency for the things that break. Most of it is predictable once it is written down, because many of the largest IT costs are now charged per user, per month.
| Budget line | What it covers | How it is usually charged |
|---|---|---|
| IT support | Helpdesk, monitoring, patching, endpoint protection, starters and leavers | Per user per month, or per device, or by the hour |
| Microsoft 365 or Google Workspace | Email, Office apps, file storage, Teams, and security features on higher plans | Per user per month, annual or monthly commitment |
| Other software | Accounts, CRM, practice management and design software | Per user or per licence, usually annual |
| Devices | Laptops, desktops, monitors, phones and tablets | Bought outright, or leased |
| Cyber security | Backup, email security, Cyber Essentials certification, staff training | Per user, per device or annual fee |
| Connectivity and phones | Broadband or leased line at each site, mobiles, VoIP phone system | Monthly per line or per user, on fixed-term contracts |
| Projects | Office moves, migrations, new systems, replacing a server | One-off, quoted per project |
| Contingency | Unplanned repairs, replacements and urgent work | A set amount held back each year |
How much should a small business spend on IT?
We know of no reliable UK benchmark for how much a small business should spend on IT as a share of turnover, and the answer varies too much by sector to be useful. A five-person accountancy practice with sensitive client data needs more security than a five-person trades business that lives on mobiles. It is more accurate to add up what each person and each site actually needs.
The two largest recurring lines for most small offices are support and Microsoft 365. Our own published prices are £30 to £48 per user per month for Core support and £55 to £90 per user per month for Complete IT and security, which adds managed cyber security, Microsoft 365 management, backup and disaster recovery, and Cyber Essentials guidance (see our IT support packages and pricing). Microsoft 365 is billed on top, at these UK list prices:
| Microsoft 365 plan | Per user per month, annual plan | Per user per month, monthly plan |
|---|---|---|
| Business Basic | £5.40 | £6.48 |
| Business Standard | £10.80 | £12.96 |
| Business Premium | £16.90 | £20.28 |
For a fuller comparison of the plans, see our Microsoft 365 business prices guide, which also covers the price changes Microsoft made in July 2026.
A worked example: IT budget for a 15-person office
This is an illustration using our own published prices and Microsoft’s UK list prices, for a single office of 15 people on Microsoft 365 Business Premium. Your figures will differ, especially for devices and connectivity, which depend on your own quotes.
| Line | Monthly (ex VAT) | Basis |
|---|---|---|
| Core support | £500 to £700 | ATS published range for a team of 15 (rounded) |
| Or Complete IT and security | £850 to £1,350 | ATS published range for a team of 15 (rounded) |
| Microsoft 365 Business Premium | £253.50 | 15 users at £16.90, annual plan |
| Devices | Your quotes, spread monthly | Replacement cost divided by the months you expect each device to last |
| Broadband and phones | Your current contracts | Check end dates and the analogue line switch-off |
| Cyber Essentials | £440 a year IASME fee (10 to 49 staff) | Plus any help with preparation |
| Contingency | Your choice | Hold back an amount for unplanned work |
If you are moving from another provider, add a one-off onboarding fee. Ours is typically £500 to £2,000, covering auditing, documenting and taking over your systems properly. You can get a quick per-user estimate for your own headcount from our IT support cost calculator.
What changes should you budget for in 2027?
Three changes are already fixed and will affect many small business budgets over the next 12 months:
- Analogue phone lines close on 31 January 2027. Openreach says “the deadline is locked” (Openreach, February 2026). Budget for moving phones to VoIP, and check anything else that uses a phone line: alarms, lift lines, card machines and door entry. Our Big Switch Off guide covers what is affected and what happens after the deadline.
- Windows 10 extended security updates double in price. Microsoft charges commercial customers $61 per device for year one, and the price doubles each year, so $122 for year two and $244 for year three. The updates are cumulative, so joining in year two means paying for both years (Microsoft Learn). Microsoft publishes these prices in US dollars; UK partners usually invoice in pounds, so check the sterling price in your quote. For most businesses, replacing or upgrading the PCs is better value. See our Windows 10 end of life guide.
- Cyber Essentials is stricter. For assessments started after 26 April 2026, missing multi-factor authentication on any cloud service that offers it, or not installing high-risk or critical updates within 14 days of release, is an automatic fail (IASME). If you need the certificate for contracts or insurance, budget for the work to meet those rules as well as the fee. Our Cyber Essentials cost guide sets out the fees.
One cost is optional rather than fixed: Microsoft now sells Copilot alongside its Microsoft 365 business plans. Treat it as a project with a trial group and a clear purpose, rather than adding it for everyone at once.
Cyber insurance renewals are also worth planning for, because insurers now ask detailed questions about your IT before quoting. Our guide to whether you need cyber insurance explains what they ask.
How to build your IT budget, step by step
The quickest way to an accurate IT budget is to start from what you already have, then add what is changing:
- List every person and device. Headcount now and planned hires, and every laptop, desktop, phone and server, with its age and operating system.
- List every subscription and contract. Microsoft 365, other software, broadband, phones and support, with the cost, the renewal date and the notice period.
- Remove what nobody uses. Licences still assigned to people who have left, and software nobody opens, are common and easy savings.
- Plan device replacements. Anything that cannot run a supported operating system needs replacing or upgrading this year. Spread the rest evenly so you are not replacing every laptop in the same month.
- Set your security baseline. Multi-factor authentication, endpoint protection, patching, separate tested backups and staff training. If you hold client data or bid for contracts, add Cyber Essentials.
- Add the known changes. The analogue line switch-off, any Windows 10 machines, and price rises at renewal.
- Add projects. Office moves, new systems or migrations, each with its own quote. If a project needs scoping first, our IT consultancy service can plan and price it.
- Hold back a contingency. Something will break or need replacing early. A set amount stops that becoming an argument about budget.
Your IT provider should be able to give you most of this from their own records. If they cannot produce a list of your devices and licences, that tells you something too.
How do you budget for IT across more than one site?
For a business with several sites, per-user support and licence costs stay the same, but each site adds its own connectivity, network equipment and possibly visits. Budget these per site:
- An internet connection at each site, and a backup connection where downtime would stop work.
- A firewall and Wi-Fi equipment at each site, and their support.
- A phone system that works across sites. A single cloud phone system usually replaces separate on-site systems.
- On-site visits. Ask whether they are included, capped or charged per visit, because this varies between providers and between sites.
- Shared files and systems. Moving them to Microsoft 365 or another cloud service avoids running a server at each site.
Our support is billed per user, so a 15-person business split across two offices pays the same per-user rate as one in a single office. Whether visits are included depends on location and package, and we set that out in the quote.
Annual or monthly: how does billing affect the budget?
Paying for Microsoft 365 on a monthly plan costs 20% more than committing for a year: Business Standard is £10.80 per user per month on an annual plan and £12.96 on a monthly plan (Microsoft UK), and Business Premium is £16.90 against £20.28 (Microsoft UK). The monthly plan is worth paying for only on licences you expect to add and remove during the year, such as for seasonal staff.
Support contracts and phone contracts work the same way: longer terms are often cheaper per month but harder to leave. Note each contract’s end date and notice period in your budget, so a renewal never rolls over by accident. Our own support is a rolling annual agreement billed per user.
Can you claim tax relief on IT equipment?
Usually, yes. Computers and other equipment bought for the business generally count as plant and machinery (HMRC helpsheet HS252). Businesses that claim capital allowances can usually use the Annual Investment Allowance, which is £1 million a year and lets you deduct the full cost of qualifying plant and machinery from profits. Companies can also claim full expensing on new and unused plant and machinery (not cars), deducting 100% of the cost from profits in the year it was bought. Sole traders and partnerships using the cash basis normally deduct equipment as an expense instead (GOV.UK).
This affects when the cost hits your profits, not how much you pay the supplier. It is general information, not tax advice: your accountant can tell you which allowance suits your business, and whether buying or leasing works out better.
Where can you save without adding risk?
- Unused licences. Remove licences from leavers promptly, and downgrade people who do not use the features they pay for.
- Annual commitments. Move stable licences from monthly to annual billing.
- Duplicate tools. Many businesses pay for file sharing, video calls or security tools that Microsoft 365 already includes on their plan.
- Licences at cost. Ask your IT provider whether they add a margin to licences. We pass Microsoft and software licences through at cost.
- Planned replacement. Replacing devices on a schedule usually costs less in lost time than waiting for them to fail.
The one place not to save is the security baseline. Multi-factor authentication, backups and patching cost little compared with recovering from an attack. Cyber Essentials now requires multi-factor authentication and prompt patching, and many insurers also ask about backups.
How ATS Connection helps
We publish our prices so you can budget before you speak to anyone: Core support from £30 per user per month, Complete IT and security from £55, licences at cost and no charge per ticket. Our small business IT support page explains what smaller teams get, and our guide to what outsourced IT support costs compares the pricing models used across the UK.
If you want to know where to spend first, book a free IT review. A senior engineer will review your setup, security, backups and Microsoft 365, and tell you what is worth fixing first. For a price, tell us your headcount and setup through our pricing page and we will give you one figure in writing.
Frequently asked questions
How much should a small business budget for IT?
We know of no reliable UK percentage-of-turnover benchmark for small businesses. Build it per person and per site instead. Managed IT support with us costs £30 to £90 per user per month depending on the package, Microsoft 365 is £5.40 to £16.90 per user per month on an annual plan, and devices, connectivity, security and a contingency are added on top.
What should be included in an IT budget?
IT support, Microsoft 365 or other software licences, devices, cyber security including backup and Cyber Essentials, internet and phones at each site, one-off projects, and a contingency for unplanned work.
Is Microsoft 365 cheaper if you pay annually?
Yes. Monthly plans cost 20% more. Business Standard is £10.80 per user per month on an annual plan and £12.96 on a monthly plan, and Business Premium is £16.90 against £20.28, excluding VAT.
Do I need to budget for the Big Switch Off?
If you still use analogue phone lines, yes. Openreach is closing them on 31 January 2027 and says the deadline is locked. Budget for moving phones to VoIP and for checking alarms, lift lines, card machines and door entry systems that use a phone line.
How much do Windows 10 extended security updates cost?
Microsoft charges commercial customers $61 per device for year one and $122 for year two, and the updates are cumulative. The price doubles each year and is published in US dollars; UK partners usually invoice in pounds. Replacing or upgrading the PC is usually better value.
Can I claim tax relief on computers for my business?
Generally yes. Businesses that claim capital allowances can usually use the £1 million Annual Investment Allowance, and companies can also claim full expensing on new and unused plant and machinery. Sole traders and partnerships using the cash basis normally deduct equipment as an expense instead. Check with your accountant, as this is not tax advice.
Sources
- Microsoft UK: compare Microsoft 365 business plans
- Microsoft UK: Microsoft 365 Business Standard
- Microsoft UK: Microsoft 365 Business Premium
- Microsoft Learn: Windows 10 Extended Security Updates
- Openreach: time for a big switch up as PSTN switch-off looms
- IASME: Cyber Essentials
- IASME: changes to Cyber Essentials for April 2026
- GOV.UK: capital allowances
- HMRC: HS252 capital allowances and balancing charges
- GOV.UK: Annual Investment Allowance
- GOV.UK: full expensing and 50% first-year allowance
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