If you’re self-employed and claiming Universal Credit, you already know the monthly reporting grind.
Every single month, you’re submitting your income and expenses to the Department for Work and Pensions, and each report has to land within 14 days of your assessment period ending. That’s 12 reports a year, just to keep your claim ticking over.
Now let’s throw Making Tax Digital into the mix. Because that’s exactly what HM Revenue & Customs has done.
If you’re wondering how Making Tax Digital affects Universal Credit claimants or whether you need MTD if you claim Universal Credit the answer may surprise you.
The Reporting Overload
Under MTD for Income Tax, self-employed individuals must submit:
- Four quarterly updates
- A final tax declaration
- Ongoing digital record-keeping using compatible software
So let’s do the maths.
You’ve already got 12 Universal Credit reports.
Add the 4 quarterly MTD updates and the final declaration.
That’s 17 separate reports every single year.
On average, a new reporting obligation lands every three weeks.
Let me just say that again: every three weeks, something needs filing.
For many self-employed people claiming Universal Credit, this creates a serious administrative burden.
When Nothing Lines Up
Here’s where it gets even messier.
Unless your Universal Credit assessment periods happen to align perfectly with the tax year — or with the calendar year if you’ve made an election each reporting obligation runs independently.
- Universal Credit reporting , one cycle
- MTD quarterly updates , another cycle
So you’re not just filing 17 times a year.
You’re managing two completely separate systems with different deadlines, periods, and rules.
And even the underlying calculations don’t fully match.
Universal Credit reporting rules don’t always align with tax rules even if you use the cash basis. That means the figures reported for benefits may differ from those reported for tax, even though they relate to the same business activity.
No Exemption for Universal Credit Claimants
You might assume there would be an exemption from Making Tax Digital if you’re already reporting monthly through Universal Credit.
After all, MTD exemptions do exist.
But Universal Credit claimants are not exempt.
In my eyes, this is a significant oversight. These are individuals already demonstrating compliance through regular monthly reporting. Adding another five reports annually, through a separate system, feels excessive.
Who Is Most Affected?
Many self-employed Universal Credit claimants operate in trades such as:
- plumbing
- mechanics
- window cleaning
- driving instruction
- construction services
These are genuine businesses often sole traders with tight margins but turnover above the MTD threshold.
Many don’t have accountants managing every submission.
Many handle compliance themselves, after long working days.
Is This Level of Reporting Proportionate?
Seventeen reports per year raises a straightforward question:
Is this proportionate?
These individuals already face one of the most intensive reporting regimes in the benefits system. Adding Making Tax Digital on top without alignment, simplification, or exemption risks penalising compliance rather than supporting it.
The government speaks frequently about reducing administrative burdens on small businesses.
This is where that commitment is being tested and currently, it appears to fall short.
FAQ: Making Tax Digital and Universal Credit
Do I need Making Tax Digital if I claim Universal Credit?
Yes. Claiming Universal Credit does not exempt you from MTD if your income meets the threshold.
How many reports must I submit each year?
Typically 12 Universal Credit reports plus 5 MTD submissions — 17 in total.
Will the figures reported to Universal Credit match my tax figures?
Not always. Reporting rules differ, so figures can vary even for the same business activity.
Can an accountant help manage both systems?
Yes. Many self-employed claimants use accountants to handle reporting and ensure compliance across both regimes.
Need Help Navigating MTD and Universal Credit?
If you’re a self-employed tradesperson affected by this reporting burden or you’re unsure how Making Tax Digital interacts with your Universal Credit reporting get in touch.
It’s exactly the kind of thing we help our clients manage every day.