Getting paid

Passing on expenses: travel, materials and software on your invoice

How to bill a client for costs you paid on their behalf: what to agree, whether to add a markup, how tax works on recharged expenses and disbursements, and which receipts to send.

31 Oct 2026 · 7 min read

Your fee, then each cost on its own line. Costs that are part of your service take your VAT. A fee paid purely for the client does not.

Ana is an architect in Bristol. For one client's project she takes the train to site twice, prints six large drawings and pays the council's planning fee from her own card. At the end of the month she adds “Expenses, £696” to the invoice. The client asks what that covers, whether VAT is on it, and for the receipts. All three questions have simple answers, if you plan for them before the first cost.

Agree it before you spend

Which costs are billed on, and which are in your fee. Many clients expect local travel and everyday software to be in your rate.
Any limit without asking first, for example “up to €200 a month, more with approval”.
Whether you add a markup, and how much.
Rates for travel by car, per kilometre or mile, if you drive.
What proof they want: copies of receipts, a list, or nothing below a certain amount.

For big costs, such as a print run or flights, ask the client to pay the supplier directly, or to pay you in advance. See deposit invoices. Carrying thousands of a client's costs on your own card for 30 days is lending them money.

One line per cost

“Expenses, £696” invites questions. One line per cost, or per kind of cost, with the date and what it was for, answers them. Group small ones sensibly: “Train fares, 2 site visits, 3 and 17 Oct” is fine. Keep expenses below your fee, so the client sees the work first and the costs after.

Markup, or cost price?

Passing costs on at exactly what you paid is the most common and the easiest to explain. A markup, often 10% to 20%, is normal in some trades, such as building, events and media buying, where you take on the risk, the handling and the cash flow. Either is fine if it was agreed. What is not fine is a markup the client finds out about from a receipt. If you add one, show it, or say on the quote that costs are billed at cost plus a stated percentage.

Tax on expenses: recharge or disbursement

This is where most mistakes are made. If you are registered for VAT or GST, there are two kinds of cost on an invoice, and they are taxed differently.

Kind	What it is	Tax, in general
Recharge	A cost you incurred to do your work: your travel, printing, materials you use, software for the project	Usually part of your service: charge your normal tax rate on it
Disbursement	A cost you paid purely on the client's behalf, for something that is theirs: a government fee, their domain, their ad spend	Often outside your tax: pass on the exact cost, without your tax, if the conditions are met

A recharge is part of what you sell, so it takes your rate, even if the cost itself had no tax on it. In the UK, for example, a train fare has no VAT when you buy it, but if you are VAT registered and bill it on as part of your service, you charge 20% on it. A true disbursement is different: you paid as the client's agent, so it is not part of your sale. The UK calls this a disbursement and India a “pure agent” cost, and both set conditions, such as passing on the exact amount and showing it separately. Check your tax office's guidance or ask your accountant, because the conditions are strict and differ by country.

Bill the net cost if you claimed the tax back

If you are registered and claimed back the VAT or GST on a cost, bill the cost without that tax, then add your own tax on top. Printing that cost £86.40 including VAT is £72 net. You claim £14.40 back, bill £72, and charge VAT on the £72. Billing the £86.40 and adding VAT again charges the client tax twice. If you are not registered, you cannot claim tax back, so the full amount you paid is your cost.

Receipts

Keep the original receipt for your own records, in the name of your business where possible. Send the client copies of the ones they asked for, in the same email or message as the invoice, and name each file so it matches its line. For a disbursement, the receipt is often addressed to the client, which is one sign it really was paid on their behalf.

Mileage and time spent travelling

Driving is billed per kilometre or mile at an agreed rate, with the trips listed: “Car, 2 trips to Bath, 46 miles at 45p”. Time spent travelling is a separate question from the cost of travel. Some charge it at the full rate, some at half, some not at all. Agree it, and if you bill it, put it on its own line. See hourly billing.

In Openn InvoiceYou can keep the cost in your own books under Purchases, but it does not move onto an invoice by itself, so the cost goes on the invoice as a line like any other: a description with the date, the quantity and the amount. Each line has its own tax rate, so a recharge can take your usual rate and a disbursement 0%, with the reason in its description. Costs you bill often, such as mileage at your rate per mile, can be saved under Items. Invoices cannot carry attached files, so send the receipts in the same email or message.

The short version

Agree which costs you bill on, any limit, any markup and what proof the client wants, before you spend.
One line per cost, with the date and what it was for.
A markup is fine if it was agreed and the client can see it.
A recharge takes your tax rate. A true disbursement may not, if your country's conditions are met.
If you claimed the tax back, bill the net cost and add your tax once.