Report business income and expenses if you're self-employed
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 or 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
Showing evidence of business income and expenses
You may need to show evidence for any business income and expenses you report, for example:
- bank accounts
If you do not show evidence, then this cannot be taken into account when calculating your payment.
When 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. You will be sent 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.
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 you are asked about. Report everything you were paid in that time, no matter when you did the work to earn it.
- 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
- 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.
For example, if the income for the business is £500, and you own 50 per cent of the business, then the income you need to report is 50 per cent of £500 which is £250.
Reporting your business expenses
You must report all self-employment business expenses for the dates you are asked 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.
You can find more information on what business expenses you can report to Universal Credit if you're self-employed at business expenses you can report if you're 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.
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 it.
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 used 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 Universal Credit if something changes
You’ll need to report any changes to your situation that affect your self-employment business.
For example, tell Universal Credit as soon as possible if you:
- close your business
- significantly reduce the amount of self-employed work you do
- are no longer able to work
- start a different business
- take a permanent job
Depending on the change, Universal Credit will need to check that:
- your self-employed work is still your main job or main source of income
- you are being paid the right amount of Universal Credit
If you close your business or significantly reduce the amount of self-employed work you do, you may need to show evidence of this in a meeting with your work coach.
Contact Universal Credit using your online account or the Universal Credit Service Centre.
You can find out more about Universal Credit and self- employment at Universal Credit - Customer Information