How to Invoice for Expenses — What You Can and Can't Charge Clients

When you complete work for a client, you'll often incur costs on their behalf — travel to meetings, materials, software, accommodation. Whether and how you can pass those costs on depends on what you agreed upfront, how you structure the invoice, and in some cases, whether you're VAT-registered.

This guide explains which expenses you can typically charge clients for, how to present them on your invoices correctly, and the VAT implications you need to be aware of.

The golden rule: agree expenses upfront

Before anything else — the most important thing you can do is agree with your client upfront which expenses will be recharged and at what rate. An expense that seems obviously billable to you may not be expected by the client. Surprises on invoices cause disputes and delay payment.

Include an expenses clause in your contract or proposal. Something as simple as "reasonable travel and accommodation costs will be invoiced at cost with prior approval" is enough to set expectations clearly.

Which expenses can you typically charge clients for?

There's no universal rule — it depends entirely on what you agree with your client. However, the following are commonly accepted as rechargeable expenses in most freelance and contractor contexts:

Almost always rechargeable

1. Travel to client sites — train tickets, flights, taxi fares, mileage. Mileage is typically charged at HMRC's approved rate of 45p per mile for the first 10,000 miles (25p thereafter)
2. Accommodation — hotels or equivalent when overnight stays are required for the project
3. Materials purchased specifically for the client's project — physical materials, props, equipment hired for a specific shoot or event
4. Postage and courier costs — if you're sending physical items on the client's behalf
5. Parking and congestion charges — when travelling to client locations

Sometimes rechargeable — depends on the agreement

1. Software licences or subscriptions — if purchased specifically for the client's project rather than as a general business tool
2. Printing and production costs — design files sent to print, proofs, physical deliverables
3. Meals and subsistence — typically only for trips away from your usual base, and often capped at a reasonable daily rate
4. Subcontractor costs — if you bring in additional help to complete the work, this may be recharged as an expense or as a separate line item
5. Stock photography or licensed assets — images or music licensed for the client's specific use

Generally not rechargeable

1. General business overheads — your office rent, broadband, general software subscriptions
2. Equipment you already own and use regularly — laptop, camera, tools
3. Travel to your own office or usual place of work
4. Training and professional development
5. Meals during a normal working day (unless away from base overnight)

How to present expenses on an invoice

Expenses should appear as separate line items on your invoice, clearly distinguished from your fees. This gives the client full transparency and makes it easier for their accounts team to categorise costs correctly.

A good approach:

1. List your fees first, then expenses as a separate section
2. Describe each expense clearly — "Return train to Manchester (14 Jan)" not just "Travel"
3. Show the amount at cost — unless you've agreed to add a handling or management fee
4. Attach or be ready to provide receipts — many clients require them for expenses over a certain threshold

Example invoice layout for a project with expenses:

The VAT complication — disbursements vs recharged expenses

This is where expenses and invoicing gets genuinely complex, and where it's worth understanding the difference between two types of recharged cost:

Recharged expenses (most common)

You pay for something, add it to your invoice, and charge your client. In this case, you're making a supply of services that includes the expense — it's just part of what you're billing. VAT applies at whatever rate your services attract. If you're VAT-registered and charging 20% on your fees, you generally charge 20% on recharged expenses too, regardless of the VAT rate originally on the receipt.

Disbursements

A disbursement is where you act purely as an agent — you pay a cost that is genuinely the client's cost, you receive no mark-up, and you pass it on at exactly the amount you paid. True disbursements are outside the scope of VAT — you don't charge VAT on them even if you're VAT-registered. However, HMRC's definition of a true disbursement is strict: the supply must have been made to the client (not to you), and you must simply be collecting reimbursement.

In practice, most freelancer expenses are recharged expenses rather than true disbursements — you made the purchase, it was supplied to you, and you're passing the cost on with your invoice. If you're unsure, treat them as recharged expenses with VAT applied, and take advice from your accountant if large sums are involved.

Mileage — the special case

Mileage is one of the most commonly recharged expenses and has its own rules. HMRC's approved mileage rates (which you can charge without needing to justify the actual cost) are:

1. Cars and vans: 45p per mile for the first 10,000 miles in the tax year, 25p per mile thereafter
2. Motorcycles: 24p per mile
3. Bicycles: 20p per mile

You can charge your client at a higher rate if you've agreed this, but HMRC's approved rates are the standard benchmark most clients accept. Keep a mileage log — date, destination, purpose, and distance — for every journey you recharge.

Should you add a handling fee on expenses?

Some freelancers add a small percentage — typically 5–15% — on top of recharged expenses as a handling or management fee. This covers the admin time involved in sourcing, purchasing, and managing costs on the client's behalf. Whether this is appropriate depends on the nature of the work and what your client expects.

If you do charge a handling fee, be transparent about it — state it explicitly on the invoice rather than burying it in the expense total. Clients who discover unmarked mark-ups tend to react badly.

Keep receipts — always

For every expense you recharge, keep the original receipt or electronic record. Clients may request them, HMRC may request them, and you'll need them to demonstrate the expense was genuine if questions are ever asked. HMRC accepts digital copies of receipts, so photographing them as you go is fine — but make sure the images are legible and include the amount, date, and supplier.

Invoice expenses clearly with Invoice Kwik

Invoice Kwik lets you add expense line items to any invoice with their own description, quantity, and rate — so your fees and your expenses are clearly separated and your client gets full transparency. VAT is calculated automatically on each line.

Try Invoice Kwik free — no credit card required.