What does Priority 1, 2, 3 mean?

Priority 1 (Essential) covers non-negotiable foundations like cybersecurity and business-critical systems. Priority 2 (Strategic) includes investments with clear business case and measurable ROI. Priority 3 (Exploratory) represents smaller bets on emerging technology like AI pilots.

How often should I update the budget?

We recommend updating actual spending monthly using the Monthly Breakdown sheet. Review the overall budget quarterly with key stakeholders. Technology changes rapidly, so quarterly reviews help you respond to new threats and opportunities. A full budget rebuild is typically done annually.

Free IT Budget Template Download

What this template includes

We've created a practical IT budget template designed specifically for UK SMEs planning their technology spend. Unlike generic budget spreadsheets, ours includes:

5 integrated worksheets covering dashboard, detailed budget, monthly tracking, UK benchmarks, and assumptions/calculator
UK-specific formatting with £ currency, UK cost benchmarks, and 2025/26 NIC calculations
Priority framework aligned with essential, strategic, and exploratory investments
2026-relevant categories including AI, cybersecurity, Windows 10 EOL migration, and cloud costs
Pre-populated guidance showing typical UK cost ranges based on current market research
Personnel cost calculator including Employer NIC (15%) and pension contributions

Free download, no signup required. Works with Microsoft Excel, Google Sheets, and LibreOffice.

Infographic showing IT budget priority pyramid with essential items at the base, strategic in the middle, and exploratory at the top — Build your IT budget strategically - essentials first, then strategic investments, finally exploratory innovation

Download the IT budget template

A comprehensive Excel spreadsheet with UK benchmarks, monthly tracking, and prioritisation framework. Free, no signup required.

Download Excel

The 5 worksheets included

The template is organised into five connected worksheets, each serving a specific purpose in your budget planning:

1Dashboard

Summary view with total budget, category breakdown, per-employee spend, and priority allocation. Compare your spending against UK benchmarks at a glance.

2Detailed budget

Line-item budget with seven categories: Cybersecurity, Cloud & Infrastructure, AI & Automation, Productivity, Personnel, Compliance, and Contingency. Includes contract dates and renewal alerts.

3Monthly breakdown

Track actual spending against budget across the UK financial year (April-March). Includes quarterly subtotals, variance calculations, and conditional formatting.

4UK benchmarks

Reference data including industry spending benchmarks, per-employee guidelines, CapEx vs OpEx decision guide, and key UK statistics for 2025/26.

5Assumptions

Configurable rates including exchange rates, 2025/26 NIC calculator (15% from £5,000 threshold), pension contributions, and scenario planning variables.

Budget categories covered

The template includes six key IT spending categories, aligned with the priorities outlined in our 2026 tech budget planning guide:

Cybersecurity

Priority 1 - MFA, EDR, training, Cyber Essentials, insurance, backup/DR

Cloud & Infrastructure

Priority 1-2 - Cloud hosting, M365, hardware refresh, Windows 11 migration

AI & Automation

Priority 2-3 - Copilot, automation platforms, AI pilots, training

Productivity & Collaboration

Priority 2 - Collaboration tools, project management, staff training

Personnel & Support

Priority 1-2 - IT staff, managed support contracts, consultancy

Compliance & Governance

Priority 1 - License audits, ISO 27001, GDPR compliance

UK IT spending benchmarks

The template includes pre-populated benchmark data based on 2025 UK market research to help you compare your spending against industry norms:

£2,500

Typical IT spend per employee (UK SMEs)

3-6%

IT spend as % of revenue (UK SME guideline)

12-25%

Recommended cybersecurity allocation

Industry ranges vary: Financial services 8-11%, Professional services 5-7%, Retail 3-5%, Manufacturing 2-3%.

How to use the template

Download and open in Excel (or Google Sheets) and save a copy with your company name
Configure Assumptions first - Update exchange rates if you have USD software, and review the NIC/pension rates
Complete the Dashboard - Enter your company name, employee count, and annual revenue
Check UK Benchmarks - Understand what's typical for your industry and business size
Build your Detailed Budget - Start with Priority 1 items, then add Priority 2 and 3
Track actual spend monthly - Update the Monthly Breakdown sheet throughout the year
Review quarterly - Compare actuals vs budget and adjust forecasts as needed

Best practice: Involve Finance, IT, and at least one department head in the planning process. Collaborative budgeting prevents siloed decisions and identifies cost-sharing opportunities.

Tip: Don't try to complete everything at once. Start with Priority 1 items (cybersecurity, business-critical systems) and add Priority 2 and 3 items once your essential spending is mapped out.

Who this template is for

Business owners planning technology investment for the coming year
Finance managers needing to forecast and track IT expenditure
IT managers building a business case for technology investment
Operations directors balancing technology needs against budget constraints

The template is designed for UK SMEs with 1-250 employees. Larger organisations may need more complex departmental breakdowns, while smaller businesses can simply hide or delete rows that don't apply.

Frequently asked questions

UK SMEs typically spend 3-6% of annual revenue on IT, or approximately £2,500 per employee per year. However, this varies by industry: financial services may spend 8-11%, professional services 5-7%, retail 3-5%, and manufacturing 2-3%. Smaller companies tend to spend a higher percentage of revenue on IT due to fixed costs. The template's UK Benchmarks sheet provides detailed guidance by sector.

Capital Expenditure (CapEx) refers to one-time purchases of assets with a useful life beyond one year, such as servers, laptops, or major software implementations. Operating Expenditure (OpEx) covers ongoing costs like subscriptions, cloud services, support contracts, and staff salaries. The template tracks both so you can report on them separately for accounting purposes.

The priority framework helps you allocate budget when funds are limited:

Priority 1 (Essential): Non-negotiable foundations - cybersecurity, business-critical systems, compliance, backup/DR
Priority 2 (Strategic): Clear business case and measurable ROI - cloud optimisation, automation, staff training
Priority 3 (Exploratory): Smaller bets on emerging technology - AI pilots, innovation projects

Yes. Upload the Excel file to Google Drive and open with Google Sheets. The formulas and formatting will convert automatically. Some conditional formatting may need minor adjustment, but all core functionality works in Google Sheets.

We recommend updating actual spending monthly using the Monthly Breakdown sheet. Review the overall budget quarterly with key stakeholders to assess whether you're on track. Technology changes rapidly, so quarterly reviews help you respond to new security threats, remove unused tools, and capitalise on new opportunities. A full budget rebuild is typically done annually, ideally 2-3 months before your financial year end.

Build a contingency line into your budget - typically 5-15% of total IT spend. This covers emergency repairs, urgent security patches, or unplanned projects. The template includes a Contingency category for this purpose. Review and adjust this buffer quarterly based on actual usage, and replenish it when used.

At minimum: IT leadership (or whoever manages technology), Finance, and an executive sponsor. For larger organisations, include department heads who use technology daily. Collaborative budgeting prevents siloed decisions, identifies cost-sharing opportunities, and ensures the budget reflects real business priorities rather than just technical wishlist.

From April 2025, UK employers pay 15% National Insurance on salaries above £5,000 (up from 13.8% on salaries above £9,100). This significantly increases the true cost of IT staff. The Assumptions sheet includes a calculator that adds NIC and pension contributions to base salaries, so you can budget accurately for personnel costs. A £50,000 salary actually costs around £58,250 when you include Employer NIC and minimum pension contributions.