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I have been told by a client that they will pay me £500.00 for a week's work, "which includes £50.00 to cover my travel costs / expenses" (their words).

When it comes to "that time of year" and I am listing how much I have earned and how much my expenses came to, how would I account for this?

My initial thought was something along the lines of this:

Total earned: £500.00
Profit: £450.00
Expenses: £50.00

I thought that I could ask for payment in the form of two cheques from my client; one for £450.00 (cost of work) and one for £50.00 (expenses); however, this then made me wonder if that would be entirely relevant as my expenses would almost certainly not be precisely £50.00.

Do I list a payment of £500.00 minus any expenses, whatever they may be? I am completely unsure.

My question, therefore, is this:

How should I list this payment of £500.00 at the end of the year considering the above information?

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  • 2
    I have no idea why someone voted to close, but I feel this is an important question! +1, and I hope you get your answer
    – Canadian Luke ♦
    Commented May 16, 2014 at 16:36
  • Personally, I generally don't write the money spend as part of job as expenses. I simply calculate the net profit and write it.
    – user702
    Commented May 16, 2014 at 20:11
  • @VarunAgw I guess his financial report has a special Expenses field and he should not omit it.
    – Peter MV
    Commented May 17, 2014 at 14:36
  • Snooker dude, what country you're in? EU or UK or USA? Or rest of the world?
    – Peter MV
    Commented May 17, 2014 at 14:37
  • @PeterMV I am in London, England (UK).
    – SnookerFan
    Commented May 20, 2014 at 7:52

2 Answers 2

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Hopefully there are some tax experts here as I'm not one!

Ideally, the £50 (or the actual travel expense amount) should be entered as a reimbursement of an expense so that you aren't paying VAT that you would pay if it was entered as income.

The VAT has presumably already been paid when you paid for your travel.

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Ideally you will bill the client £500. Then you claim back your expenses from your company (you need receipts) you will then only be taxed on the remainder. Which is what I assume you mean by 'that time of year'

An accountant would be able to advise you more ;)

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