Last updated November 6, 2026
Rules and figures from other sources checked on November 6, 2026. They change, so confirm with the source before you rely on them.
General information, not tax or legal advice. The rules depend on your country and your situation, so check anything with a tax or legal consequence with your accountant.
An expense claim policy for a small project firm says what staff can claim, what needs approval first, what evidence to attach, how soon to claim and how costs reach the client. One page is enough. The wording below is ready to copy. Set your own limits, and check the tax lines with your accountant.
Expense claim policy example you can copy
This expense claim policy is written for an invented firm. The figures in brackets are examples to replace with your own, not recommended amounts.
1. The principle. We repay reasonable costs you pay personally while working for [Firm]. You shouldn't end up better or worse off.
2. Ask first. Get approval from your project lead before any overnight trip, and before spending more than [€100] on one item.
3. Receipts. Attach a receipt for every item. A card slip isn't enough, because it doesn't show what was bought or the VAT. For anything over [€100], ask for a VAT invoice in the firm's name. If you lose a receipt, say so on the claim and [name] will decide.
4. Project codes. Put the project code on every project cost, and mark whether it can be recharged to the client.
5. Deadline. Submit claims by the [5th] of the following month. We may refuse anything older than [three months].
6. Approval. Your project lead or line manager approves your claim. Nobody approves their own. Directors' claims go to [another director or the bookkeeper].
7. Payment. We pay approved claims by bank transfer within [10] working days. This doesn't depend on whether the client has paid us.
8. Company cards. Company card spending needs the same receipts and project codes, by the same deadline.
9. False claims. A deliberately false claim is a disciplinary matter. An honest mistake just gets corrected.
Then add a table of what can be claimed, because that's the part staff will actually look up:
| Cost | Rule | Limit (example) |
|---|---|---|
| Train, bus, taxi | Standard class. Taxi where there's no reasonable alternative | Actual cost |
| Own car | Per mile, on the mileage claim form | [Approved rate] |
| Parking and tolls | With a receipt | Actual cost |
| Hotel | Approved in advance | [€140] a night |
| Meals when away overnight | Actual cost, with receipts | [€35] a day |
| Client hospitality | Director's approval first, and list who attended | [€50] a head |
| Site consumables and safety kit | Project lead's approval over [€50] | Actual cost |
| Not claimable | Commuting, fines, personal items | None |
What does a worked expense claim look like?
A worked expense claim shows each item with its project code, whether it can be recharged, and net, VAT and total kept apart. Here's an invented one, at 20% VAT, with a train ticket that carries no VAT:
| Date | Item | Project | Recharge? | Net | VAT | Total |
|---|---|---|---|---|---|---|
| 3 Mar | Train to client | P-114 | Yes | €48.00 | €0.00 | €48.00 |
| 3 Mar | Hotel, one night | P-114 | Yes | €110.00 | €22.00 | €132.00 |
| 4 Mar | Parking at site | P-114 | No | €10.00 | €2.00 | €12.00 |
| 9 Mar | Safety boots | None | No | €50.00 | €10.00 | €60.00 |
| Total | €218.00 | €34.00 | €252.00 |
Three different numbers come out of this form:
- The employee is repaid €252.00, the total they actually spent.
- The firm's cost is €218.00, if it can reclaim the €34.00 VAT.
- The client is recharged €158.00 net (€48 + €110), plus VAT if it applies to the recharge. The other €60.00 stays as the firm's own cost.
The mistake to avoid is recharging the hotel at €132 and then adding VAT, because that charges the client VAT on VAT. How a recharge is taxed depends on whether it's a disbursement or part of your own service. The guides to invoicing reimbursable expenses and VAT on reimbursable expenses go through both.
What does a firm need to reclaim VAT on staff expenses?
To reclaim VAT on a staff expense, a firm generally needs a proper VAT invoice or receipt for a genuine business cost, and some categories are blocked whatever the paperwork says.
- In the EU, Article 178(a) of the VAT Directive makes holding a valid invoice a condition of deducting VAT, and Article 176 excludes spending that isn't strictly business, such as luxuries, amusements or entertainment. Member states apply their own limits on top, so what's blocked varies by country.
- In the UK, a supplier can issue a simplified VAT invoice for supplies of £250 or less, so a till receipt showing the supplier's name, address and VAT number, the date, a description, the total and the VAT rate may do. VAT on business entertainment is generally blocked, with an exception for overseas customers. Entertaining your own employees is treated differently.
In practice, treat client hospitality as a cost that includes its VAT unless your accountant tells you otherwise. That's why the policy asks for attendee names as well as a receipt.
Are reimbursed expenses taxable for the employee?
Reimbursed expenses generally aren't taxable when they repay a genuine business cost, but the rules vary by country and tighten for allowances paid without evidence of spending.
In the UK, HMRC's exemption for paid or reimbursed expenses means an employer needn't report an expense the employee could fully deduct. It doesn't cover mileage payments for an employee's own vehicle, which have their own rates. Flat scale-rate payments have conditions of their own, so ask before you pay one.
In the US, IRS Publication 463 describes an accountable plan: the expense has a business connection, the employee accounts for it within a reasonable period, and any excess is returned. Accounting within 60 days counts as reasonable. Amounts outside those rules are treated as wages.
Elsewhere, ask your accountant which flat allowances your country accepts. Watch out for the round-sum allowance paid every month "for expenses", which usually belongs on the payslip.
Which expense claim mistakes cost a firm money?
The expense claim mistakes that cost a firm money are mostly quiet ones that never show up as an error.
- Rechargeable costs that aren't marked. A hotel bill with no project code never reaches the client's invoice, and the firm simply absorbs it.
- Claims saved up for a quarter. By then the VAT may belong to an earlier return, and the job may already have been invoiced.
- Self-approval. It's rarely dishonest. It just removes the only check on whether a code or a figure is right.
- Card slips instead of receipts. They prove payment but not what was bought, which won't support a VAT reclaim.
- Unreconciled advances. A cash float with no claim against it is either a loan or pay, and it's better to know which.
Recording expense claims in ERPFlow
ERPFlow has no employee expense claims, approval workflow or reimbursement, so the claim form and its approval stay outside it, in a spreadsheet or on paper.
Once a claim is approved, record each cost as an expense with a name, amount, category, tax and any supplier, and attach the receipt. On a phone or tablet, Take photo attaches a picture of it in one step. There's no receipt reading, so you type the figures. Totals for this month, last month, this year and all time sit above the list.
An expense in ERPFlow isn't linked to a customer or a job, so it won't show you costs per project. Put the project code in the expense's name so you can find it again, and keep the claim form as your record by job. To recharge a cost, add it as a line on the invoice yourself. Permission to manage expenses covers every expense rather than a person's own, so it's safest to keep entry with one person.