Report business income and expenses if you're self-employed

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

You can find out more information about keeping business records

Showing evidence of business income and expenses

You may need 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, then this cannot be taken into account when calculating your payment. This means you might get too much Universal Credit and will have to make a repayment.

You can find out more about overpayment of benefits and financial support

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.

If you have no self-employed income or expenses for that month, you must report this to Universal Credit. 

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 into 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 you are asked 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.

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.

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 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.

Let Universal Credit know if something changes

You’ll need to report any changes to your situation that affect your self-employment business using your Universal Credit online account.

You must tell us as soon as possible if you:

• close your business
• significantly and continuously reduce the amount of self-employed work you do or how much you earn
• significantly and continuously increase the amount of self-employed work you do or how much you earn
• have seasonal changes that impact your business
• are no longer able to work
• start a different business
• take employed work

If you close your business or significantly reduce the amount of self-employed work you do, you may need to meet your work coach and show evidence of the changes.

You must also tell HMRC about a change to your business.

You can find a printable booklet on Universal Credit if self-employed