See the following from How to upgrade to macOS Big Sur - Apple Support
If upgrading from macOS Sierra or later, macOS Big Sur requires 35.5GB of available storage to upgrade. If upgrading from an earlier release, macOS Big Sur requires up to 44.5GB of available storage. To upgrade from OS X Mountain Lion, first upgrade to OS X El Capitan, then upgrade to macOS Big Sur.
The storage needed is on your Mac, not on iCloud. Just buying more iCloud storage won't solve the issue although it may be able to help. See information in How to free up storage space on your Mac - Apple Support