The Ministry of Defence (MOD) says morale among Russian troops is suffering because of problems with their pay.
UK defence intelligence suggests there have been failures in giving troops basic entitlements like uniform, arms, rations and money.
The MOD says the troops' income is made up of a "modest" core salary, boosted by bonuses and allowances. It suggests there have likely been significant problems with "sizeable combat bonuses" not being paid in Ukraine.
The intelligence update estimates it is probably due to "inefficient military bureaucracy, the unusual legal status of the 'special military operation', and at least some outright corruption amongst commanders".
Combat fatigue and a high number of casualties have also been blamed for the "continued fragile morale" of the force.
It comes as Russian shelling hit Ukraine's southern port city of Mykolaiv overnight, according to the city's mayor.
Mykolaiv and the surrounding region have been targeted daily for weeks in the conflict.
The city's mayor Oleksandr Senkevych did not say whether there were any injuries in the overnight attack, which he said damaged some homes.