Guidance

Report business income and expenses to Universal Credit if you are self-employed

Updated 9 April 2024

Overview

You must report your business income and expenses to Universal Credit each month if you are self-employed.

You must do this even if:

• Universal Credit does not class you as ‘gainfully self-employed’
• you did not have any income or expenses that month

Keeping business records

You can keep records for Universal Credit and HMRC in a similar way.

You’ll need to keep an accurate record of:

• income, or any payments into your business
• expenses, or any payments you made out of your business

Read more about keeping business records.

Showing evidence of business income and expenses

You may be asked to show evidence for any business income and expenses you report, for example:

• receipts
• invoices
• bank accounts

This is to make sure you keep getting the right amount of Universal Credit each month.

If you do not show evidence when asked, then we cannot take this into account when calculating your payment. This means you might receive too much Universal Credit and will have to make a repayment. Find out about paying back overpayments.

How to report your income and expenses to Universal Credit

You must report your self-employed income and expenses to Universal Credit once a month. You normally do this in your online account. We will send you a text message or email when you need to report this.

You will not get your Universal Credit payment until you have reported your business income and expenses. If you report late, your payment may be delayed.

To report your income and expenses, sign in to your Universal Credit online account.

If you are not able to report online, you’ll need to contact Universal Credit.

Reporting your business income

You must report all self-employment business income for the dates we ask you about. Report everything you were paid in that time, no matter when you did the work to earn it.

This includes:

• any payments for goods or services made by credit or debit card, cash, cheque or bank transfer
• any goods or services as payment (report what you would have charged the customer if they had paid money for your work)
• any tips or gratuities
• any income tax or National Insurance refunds related to your self-employed business
• any grants or subsidies, if they are treated as taxable income by HMRC
• the sale or transfer of business assets which have previously been declared as an expense

Only report income that is directly related to your business.

Reporting income if you’re in a business partnership

If you’re in a business partnership, only report your share of the business income.

Work out the business’s actual income, then divide it to reflect your share.

Reporting your business expenses

You must report all self-employment business expenses for the dates we ask you about.

You can claim for business expenses that are:

• necessary and appropriate to your business
• not extreme or excessive

These are called ‘allowable expenses’. You must report any allowable expenses your business paid out each month.

You cannot claim business expenses for:

• assets that do not lose their value over time, such as property or shares
• event hospitality or entertaining clients, suppliers or customers
• donations to charity
• membership fees not related to your business

Only report expenses that are directly related to your business.

Read more about what business expenses you can report to Universal Credit if you are self-employed

Reporting expenses if you’re in a business partnership

If you’re in a business partnership, only report your share of the business expenses.

Work out the business’s actual expenses, then divide it to reflect your share.

Reporting VAT

If you’re VAT registered, you can choose whether to include VAT when reporting your income and expenses.

You must be consistent. If you choose to include VAT, you should always report any VAT that you’ve:

• charged your clients
• paid to HMRC
• had refunded to your business

If you do not choose to include VAT, you should never report these items.

How to work out your self-employment business expenses

Simplified expenses or actual costs

You can avoid using complex calculations to work out some of your business expenses by using simplified expenses.

Simplified expenses use standard ‘flat rates’ (flat rates are a set amount we use to calculate the expense), so you do not have to work out your actual costs.

You can use simplified expenses for:

• costs for some vehicles (reporting how many miles you travelled for business)
• using your home for business (reporting how many hours you worked from home)
• living at your place of business (reporting how many people lived there)

If you choose to calculate your actual costs rather than flat rates, you will need to add up your total allowed costs for the period, then work out what part of your total costs were used only for your business.

Both business and personal costs

If an expense is for both business and personal use, you can only claim the part of the costs spent on business use.

For example, your mobile phone bill is £100. Of this, £70 is personal use and £30 for your business. You can only claim the £30 as a business expense.

Tell us if something changes

You must tell us if something changes that affects you or your self-employment business.