Last updated November 6, 2026
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.
To invoice a reimbursable expense, put it on the invoice as its own line, with what it was, when it happened and the amount, at cost or with any markup you agreed. Keep the receipt. Whether you add VAT depends on whether it's a recharge (usually yes) or a true disbursement (usually no).
How should reimbursable expenses appear on an invoice?
Reimbursable expenses should appear as separate lines below your fee, each specific enough that the client's accounts team needs to ask nothing. "Expenses: €240" gets queried. This one doesn't:
Expense: rail and hotel for client site visit, 11 to 12 March 2026, at cost. Receipts available on request.
Group small items if the client agrees, but give each group a date range. If you've marked a cost up, don't write "at cost" beside it.
Bill expenses on the same invoice as the work they relate to, or in the first invoice after you've paid them. An expense that turns up four months later has often lost its home in the client's budget. The time spent travelling is a separate question from the fare, and the guide to billing for travel time deals with it.
Is it a recharge or a disbursement?
A recharge is a cost you bought in order to do your own work, while a disbursement is a cost you paid purely on the client's behalf. The difference decides the VAT.
| Recharge | Disbursement | |
|---|---|---|
| Who received the goods or service | You | The client |
| Example | Your train fare to their site | Their planning application fee, paid for them |
| VAT on your invoice | Your normal rate, on the whole line | None added, shown separately |
| Can you reclaim VAT on the cost? | Generally yes, with a valid receipt | No |
| Can you mark it up? | Yes, if agreed | No, exact amount only |
Most business expenses are recharges, whatever the invoice calls them. HMRC's own example is a consultant who flies to a client's site: the fare can't be a disbursement, because the airline's supply was to the consultant (Notice 700, paragraph 25.1.3). In the UK, all of HMRC's conditions must be met to treat something as a disbursement. In the EU, the rule is Article 79 of the VAT Directive: the money must be spent in the customer's name and on their behalf, and you must prove the actual amount and can't deduct VAT on it.
The tax side of this has its own guide: VAT on reimbursable expenses and disbursements. The rest of this one is about getting it onto the invoice.
A worked invoice with a fee, a recharge and a disbursement
Here's an invented example, using 20% VAT to keep the arithmetic simple. A consultant bills a fee, recharges travel, and passes on a planning fee paid on the client's behalf.
| Line | Net | VAT (20%) | Total |
|---|---|---|---|
| Consulting: site review, 12 March | €1,800.00 | €360.00 | €2,160.00 |
| Expense: rail and hotel, 11 to 12 March, at cost | €240.00 | €48.00 | €288.00 |
| Disbursement: planning application fee paid on your behalf, ref. 2026/418 | €95.00 | none | €95.00 |
| Total | €2,135.00 | €408.00 | €2,543.00 |
How do you avoid charging VAT on VAT?
You avoid charging VAT on VAT by recharging the cost net of any VAT you can reclaim, then adding your own VAT on top. This is the most common mistake on an expense line. Take an invented €120 hotel receipt that includes €20 of VAT.
| Your position | Your real cost | Invoice line | VAT on it | Client pays |
|---|---|---|---|---|
| VAT-registered, reclaiming the €20 | €100 | €100 | €20 | €120 |
| VAT-registered, can't reclaim it | €120 | €120 | €24 | €144 |
| Not VAT-registered | €120 | €120 | none | €120 |
| Wrong: reclaiming the €20 and also billing €120 + VAT | €100 | €120 | €24 | €144 |
The second row is correct, and it surprises people. Some countries restrict reclaiming VAT on hotels and meals, and then the whole €120 is your cost and your own VAT still applies to the line. Ask your accountant which costs you can reclaim.
The last row is the one to avoid. The client pays €24 too much, and an alert accounts team will send it back.
At cost or with a markup?
At cost is the usual default for reimbursable expenses, and a markup is fine if the client agreed it in writing. A markup is reasonable where you carry real cost in fronting the money or managing a supplier. On the €240 above, 10% makes the line €264, with €52.80 of VAT. Whichever you choose, state it before you spend:
Expenses: travel and other costs needed for this work are billed at cost, without markup, on the invoice for the month they arise. Any single cost above €100 needs your written approval first. Receipts are available on request.
The approval line prevents most arguments. Without it, you're asking the client to approve a €600 hotel after the stay.
The mistakes that cost you money
- Forgetting it. The usual reason is that the cost lives in a card statement and the invoice lives somewhere else. Check your expenses before you send each invoice.
- Losing the receipt. No receipt can mean no VAT reclaim, and no answer when the client asks.
- Reclaiming VAT on a disbursement. You can't do both.
- Confusing re-billing with staff claims. Paying back an employee who covered a cost is a separate job, whatever you then bill the client. See the expense claim policy.
Re-billing an expense in ERPFlow
Expenses in ERPFlow aren't linked to customers or jobs, so re-billing a cost is a line you type on the invoice. ERPFlow can't pull an expense onto an invoice, flag one as unbilled, or show cost or margin per customer.
So you do two things. Record the cost under Expenses, with its category, supplier, VAT and the receipt attached. Then type the line on the invoice: description, quantity, price, and tax rate, or no tax for a disbursement. Add the invoice number to the expense's description, so you can see at a glance that it's been billed.
Files attached to an invoice are internal and aren't sent to the customer, so if a client wants the receipts, send them separately.
ERPFlow has no employee expense claims or reimbursement, no mileage tracking and no receipt scanning.