What Is a Cloud PBX? How It Works, What It Costs and Whether You Need One (UK 2026)

Quick answer

A cloud PBX is a business phone system whose central brain - the PBX, or private branch exchange - runs in a provider's data centre instead of in a cabinet in your office. It does everything the old box did: holds your numbers, routes incoming calls to the right people, runs the auto attendant, queues, voicemail and call recording. Because it is in the cloud you reach it over your internet connection, staff use IP desk phones, an app or Microsoft Teams, and you manage it in a web portal. Cloud PBX, hosted PBX, virtual PBX, hosted telephony and cloud phone system are different names for the same kind of service; providers pick the one they think sells. It is priced per user per month, roughly £8 to £20 ex VAT as an illustrative September 2026 guide, and it is what most UK businesses are moving to as the analogue and ISDN lines are switched off.

This guide explains what a PBX does, what changes when it moves to the cloud, and how to decide between a cloud PBX, keeping an on-site PBX with SIP trunks, and Teams. If you want it designed for your team, get a no-obligation quote.

What a PBX does

Every business with more than one phone has a PBX, whether it knows it or not. It is the piece that turns "our number" into "the right person's phone": when 01282 xxxxxx rings, something has to decide whether that goes to reception, round the sales team in turn, to a queue with music, or to voicemail after hours. That something is the PBX. It also lets staff transfer calls, put them on hold, dial each other by extension, and pick up voicemail. For decades it was a box on the wall, connected to the outside world by analogue or ISDN lines and to the desks by proprietary handsets, and looked after under a maintenance contract.

What changes when it moves to the cloud

The box becomes software running in the provider's data centres - resilient, replicated, and shared securely across many customers. Your office connects to it over the internet. Three things follow:

1. Nothing to own or maintain. No hardware, no maintenance contract, no engineer visit when it fails, no replacement in year six.
2. The office stops being the centre. Because the PBX is in the cloud, a desk phone at home, an app on a mobile or a Teams client in a café are all just endpoints. One number, any device, any location.
3. Features are included and updated. Auto attendant, queues, recording, voicemail-to-email, analytics and integrations are tiers and toggles rather than licence purchases and upgrade projects.

What does not change is the job. Callers still dial your numbers; calls still go where you want them. Our guide to how hosted telephony works follows a call through the system step by step.

Cloud PBX vs on-site PBX vs SIP trunking

The decision that matters is the first column against the third, and it comes down to the age and capability of any PBX you already have. SIP trunking vs hosted VoIP works through it, and hosted vs on-premise total cost puts five-year figures on it.

What a cloud PBX includes

The features a small business used to pay an installer for, as standard or a tier away:

• Auto attendant and IVR - "press 1 for sales" - with time-of-day and holiday rules you set yourself. See the IVR guide.
• Hunt groups and call queues, with music, position announcements and overflow.
• Voicemail-to-email and visual voicemail in the app.
• Call recording with retention rules - see recording and compliance.
• Call analytics: missed calls, wait times, who answered.
• Presence and transfer across desk phones, apps and Teams.
• Integrations with CRM and Microsoft 365.
• Multi-site on one system, with free internal calls and shared reception.

The full feature rundown covers which ones earn their keep.

What you need

• A stable internet connection. Roughly 100 kbps per concurrent call, but stability matters more than speed - see the internet speed VoIP needs.
• Endpoints. IP desk phones (existing SIP phones are usually reusable), the provider's desktop and mobile app, or Microsoft Teams. Most teams use a mix, and many use no desk phones at all.
• A router that prioritises voice and, ideally, wired connections for desk phones.
• Your numbers, which port across under Ofcom's rules - see number porting.

What it costs

Per user per month. As an illustrative September 2026 guide, roughly £8 to £20 ex VAT for a standard seat: the bottom of the range with per-minute calls, the top with unlimited UK minutes, recording and analytics. Handsets are roughly £60 to £200 one-off or a few pounds a month rented; porting is often free or a small fee; set-up is usually bundled into the term. The copper line rental and the PBX maintenance contract disappear. Full detail and worked examples are in what hosted telephony costs.

Cloud PBX and Microsoft Teams

If your team lives in Microsoft 365, Teams itself can be the PBX through Calling Plans, Operator Connect or Direct Routing. It suits knowledge workers well and struggles with busy receptions, compliance recording and analogue devices, which is why a common design is a cloud PBX for reception and call-heavy teams alongside Teams for everyone else. Microsoft Teams Phone for UK businesses compares the options.

Moving to a cloud PBX

Audit what you have, decide who needs a full seat, test the line, port the numbers with the new system live first, then cease the old lines. Two to four weeks from go-ahead is typical, mostly waiting on the port. Businesses on ISDN or analogue lines will do this before the PSTN switch-off forces the timetable; doing it on your own terms is cheaper.

The bottom line

A cloud PBX is the same switchboard your business always needed, moved to the provider's data centre and rented per user instead of bought and maintained. For most UK businesses it costs less over five years than an on-site PBX, includes the features that used to cost extra, and lets staff work from anywhere on one number. The only businesses that should keep a PBX on site are those with a recent, capable one worth running on SIP trunks until it retires.

If you want a cloud PBX designed for your team, or an honest view on whether your existing PBX has life left in it, get a no-obligation quote or call 0333 006 9399. Our hosted telephony service page explains how a quote works.

Not sure who is calling one of your numbers? Our free UK phone number checker shows which network or provider Ofcom allocated any number to, and whether the range is in service — no sign-up.