Two sets of rules

HMRC vs Universal Credit

The same receipt can be treated differently in your tax return and in your monthly Universal Credit report.

The big differences

Year or month

HMRC works on your profit for the tax year. UC works on money actually paid in and out in each monthly assessment period.

Tax and NI

UC lets you report Income Tax, Class 4 and voluntary Class 2 NI, and pension contributions you've paid. HMRC never treats these as business expenses.

Mileage

HMRC: 55p for the first 10,000 miles a year. UC: 45p for the first 833 miles a month, then 25p.

Equipment

HMRC uses capital allowances (or, on the cash basis, an expense). UC has no capital allowances — you report equipment when you pay for it.

Loan interest

UC caps business loan interest at £41 a month. HMRC has no cap.

Trading allowance

HMRC offers a tax-free trading allowance. UC doesn't — all trading income is reported each month.

Tax yearRates and limits on this page follow the year you choose. Announced means not yet law.

Entries that differ

Entry	HMRC answer	What's different for UC
#4 Working from home	Partly	UC counts fewer activities as working from home
#6 Structures and Buildings Allowance	Depends	No equivalent in UC
#7 Vehicle running costs and mileage	Yes	Different mileage rates and stricter rules on cars
#8 Business travel and subsistence	Yes	UC adds a rule for subcontractors' site travel
#9 Ordinary commuting	No	UC allows site travel for some subcontractors
#14 Staff wages, pensions, benefits and subcontractors	Yes	Your own PAYE salary and partners' wages are treated differently
#23 Bank charges, loan interest and finance costs	Yes	UC caps loan interest at £41 a month
#25 The cost of preparing your Self Assessment return	Partly	See entry
#28 Trade and professional subscriptions	Yes	UC excludes union membership
#29 Client, supplier and customer entertaining and gifts	No	DWP doesn't mention small branded gifts
#31 Training that updates or improves your existing skills	Yes	UC is stricter on expanding into new areas
#32 Training for a new, unrelated trade	No	UC also excludes related expansion
#33 Annual Investment Allowance	Yes	No capital allowances in UC
#34 First-year allowances	Depends	Not applicable in UC
#35 Writing-down allowances	Depends	Not applicable in UC
#36 Business cars and capital allowances	Depends	UC won't let you claim buying or leasing an ordinary car
#40 Sole trader vs limited company — the same expense, treated differently	Depends	See entry
#41 Cash basis vs traditional accounting	Depends	UC always works monthly on money in and out
#42 The trading allowance vs claiming actual expenses	Depends	No trading allowance in UC
#43 VAT and your expenses	Depends	See entry

Treated the same

Not covered by DWP's guidance

DWP's guidance doesn't address these. If one matters to your report, ask your work coach.

Sources: DWP — Business expenses you can report to UC (updated 28 July 2026) and the HMRC guidance linked from each entry. Last checked: 10 November 2026.