Guidance

Business expenses you can report to Universal Credit if you are self-employed

Updated 9 April 2024

How to report your income and expenses to Universal Credit

Find out how to report your income and expenses to Universal Credit.

Car, van and travel expenses

Cars and minicabs

You can claim expenses for using a car or minicab for business travel if the vehicle is not specially adapted for business use. If you do claim these expenses you must use simplified expenses (a flat rate).

You cannot claim expenses for the purchase, lease or acquisition of a car or minicab if the vehicle is not specially adapted for business use. But you can claim for costs that are not a direct result of the purchase or use of the vehicle, for example:

• minicab radio hire charges if they’re separate from vehicle hire costs
• fees for business-specific licences such as the licence to drive a minicab

You can claim these actual costs in addition to any simplified expenses.

Other vehicles like vans, motorcycles, black cabs

You can claim expenses for other vehicles like a motorbike, a scooter or a vehicle that is specially adapted for business use (such as a van, black cab or driving instructor dual-control car).

To claim expenses, you can choose to use simplified expenses or actual costs.

Using simplified expenses (a flat rate) for car, vehicle and travel expenses

Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.

Use your online account to report how many miles you travelled for business that month.

We will use a flat rate to calculate your costs:

For a car, van or other motor vehicle the flat rate is:

• 45 pence per mile for the first 833 miles
• 25 pence per mile for every mile over 833 miles

For motorbikes or scooters the flat rate is 24 pence per mile.

If you use the flat rate to record your car, vehicle or travel expenses this includes all costs relating to your car, vehicle or travel for the month. You cannot claim expenses for any actual costs, for example costs such as fuel, servicing, repairs, vehicle insurance, road tax and MOT. These costs are included in the flat rate.

Other business travel

You can claim costs for business travel, including:

• public transport, for example train or bus fares
• taxi fares
• air travel
• hotel rooms
• meals during overnight stays
• parking, tolls and congestion fees
• travel between home and the site, if you’re a sub-contractor who works at 2 or more sites during a year

You cannot claim costs for:

• commuting (travel between your home and your normal place of business)
• personal or non-business travel costs
• penalties, such as parking fines

Place of business

Your ‘places of business’ are the places where you do your work.

You can claim running costs for these, including:

• rent of a business premises, such as an office or warehouse
• utility bills, for example water and electricity
• business rates or council tax
• property insurance
• security and cleaning
• repairs and maintenance
• purchase, repair and maintenance of business equipment, for example computers or printers

You cannot claim business expenses for:

• lunch
• buying places of business
• any non-business use of business equipment

Using your home for business

You can claim business expenses for using part of your home for your self-employed work.

This might be for:

• providing services to a customer, for example as a hairdresser or an artist
• essential business administration, for example filing invoices, recording payments or stock taking
• other business activities, for example sales and marketing activities

You cannot claim business expenses for using your home for:

• storage
• completing tax returns for HMRC
• self-reporting your earnings for Universal Credit
• being on call
• being available to carry out work

To claim business expenses for using part of your home for your self-employed work, you can either:

• calculate your actual business costs, or
• use simplified expenses (a flat rate) if you’ve worked more than 25 hours a month from home

How to calculate your actual business costs if you work from home

You need to find a reasonable method of dividing your costs, for example by the number of rooms you use for business or the amount of time you spend working from home.

You may be able to claim a proportion of your costs as business expenses for things like:

• heating  
• electricity
• internet and telephone use

Example

If you have 4 rooms in your home, one of which you use only as an office.

Your electricity bill for the month is £100.

Assuming all the rooms in your home use equal amounts of electricity, £25 of this would be for the office (£100 divided by 4).

For each day you work from home in the month, you could claim £0.83 as an allowable expense (£25 divided by 30).

How to use simplified expenses (a flat rate) for using your home for your self-employed work

To use simplified expenses, tell us how many hours you used your home for business purposes. We will use a flat rate to calculate your expenses.

This means that you do not have to work out the proportion of personal and business use for your home. For example, how much of your utility bills are for your self-employed work.

If you use simplified expenses, you cannot also claim for actual costs.

You can only use simplified expenses if you work for 25 hours or more a month from home. If you work less than 25 hours you must work out actual costs.

If you worked from home	What you should report
25 to 50 hours a month	£10
51 to 100 hours a month	£18
101 hours a month or more	£26

Example

If you work 40 hours from home in a month, you should report £10.

Living at your place of business

If you live in a building primarily used for your business, such as a pub or B&B, you can claim expenses for some of the running costs.

You can either:

• use simplified expenses, or
• calculate your actual business costs

To use simplified expenses, calculate your total running costs and subtract:

How many people live there	Amount you should subract from your running costs
1 person	£350
2 people	£500
3 people or more	£650

Tax, National Insurance and pension

You can claim business expense costs of any:

• income tax paid to HMRC on your self-employed earnings
• VAT paid to HMRC, if you report VAT-inclusive earnings
• Class 2 or Class 4 National Insurance contributions
• contributions paid into a registered pension scheme

These must be payments you actually made during the monthly reporting period, not estimates.

Legal and financial costs

You can claim business expenses for legal and financial work done for your business.

This includes:

• business loan interest (up to a maximum of £41 each month)
• accounting fees
• legal fees
• insurance
• bank charges
• your share of the expenses, if you’re in a business partnership
• expenses from a company that you own or have control over, for example where you are a director

You cannot claim the costs for any capital repayments on a business loan.

Office and equipment costs

You can claim business expenses for office and equipment costs.

This includes:

• phone, mobile and internet bills
• stationery and postage
• printing, including printer ink and cartridges
• computer software
• equipment or tools, including purchase, hire or repair
• any other office or equipment costs that are necessary and appropriate to your business

Staff expenses

You can claim business expenses for:

• staff and employee wages (including your salary if you pay yourself using PAYE)
• subcontractor costs
• employer’s pension scheme contributions
• employer’s National Insurance contributions
• bonuses and benefits
• agency fees
• training courses related to your business

You cannot claim the costs of:

• carers or domestic help, for example nannies or gardeners
• wages paid to a business partner

Goods and materials

You can claim business expenses for goods and materials.

This includes:

• stock and goods for resale
• raw materials
• direct costs from producing goods
• any other goods and materials costs that are necessary and appropriate to your business

Payment in kind

You can claim business expenses for the monetary value of any work your business did as ‘payment in kind’ for goods or services. Payment in kind is when you pay using a good or service instead of cash.

Clothing costs

You can claim business expenses for work clothing.

This includes:

• uniforms
• protective clothing needed for your work
• costumes, for example for actors or entertainers

You cannot claim the costs of normal clothing, even if you wear it for work.

Marketing and advertising

You can claim expenses for growing your business.

This includes:

• advertising and marketing
• free samples
• website costs

Professional subscriptions

You can claim business expenses for professional subscriptions if they are related to your business.

This includes:

• subscriptions to trade or professional journals
• trade body or professional organisation membership

Training courses

You can claim expenses for training that helps you improve the skills and knowledge you use in your business (for example, refresher courses).

The training courses must be related to your business.

You cannot claim for training courses that help you:

• start a new business
• expand into new areas of business, including anything related to your current business

Entertainment

You cannot claim business expenses for event hospitality or entertaining clients, suppliers or customers.

Reselling goods

You can claim business expenses for:

• goods for resale (stock)
• raw materials
• direct costs from producing goods

You cannot claim for:

• any goods or materials bought for private use
• depreciation of equipment