Expense reports: rules, receipts and a simple template

What an expense report is for

An expense report is a simple list: date, what you bought, why it was for work, the amount, and the receipt that proves it. Your manager approves it, finance pays you back, and the company keeps it as evidence that the payment was a reimbursement, not extra salary.

That last point is the whole reason for the paperwork. Tax authorities on both sides of the Atlantic treat a properly documented reimbursement as the employer’s cost, not your income. Without the documentation, the same payment can end up taxed as wages.

UK employees: the HMRC rules

HMRC’s exemption for paid or reimbursed expenses covers two situations:

• the employer pays back the employee’s actual costs; or
• the employer pays a flat rate that is either an HMRC benchmark rate or a bespoke rate HMRC has approved.

Expenses covered by the exemption, such as business travel, phone bills, business entertainment, and uniforms and tools for work, don’t need to be reported to HMRC. There are two conditions employers tend to forget: you must have a system to check payments made at benchmark or bespoke rates, and you should tell employees to keep proof of their expenses, such as receipts or bills, in case you need to check them.

Mileage in your own car. Employers can pay approved mileage allowance payments tax-free up to HMRC’s rates:

If the employer pays more, the excess is reported on form P11D and added to taxable pay. If it pays less, nothing is reported, and the employee can claim Mileage Allowance Relief on the difference.

Example: Amira drives 212 business miles in October in her own car. At 55p a mile, her employer can pay her £116.60 tax-free.

US employees: accountable plans

In the US, IRS Publication 463 sets out when reimbursements stay off your W-2. Under an accountable plan, you must:

1. have paid or incurred the expenses while performing services as an employee (a business connection);
2. adequately account to your employer for them within a reasonable period of time; and
3. return any excess reimbursement or allowance within a reasonable period of time.

The IRS’s fixed date method gives a safe definition of “reasonable”: an advance given within 30 days before the expense, an accounting within 60 days after it, and any excess returned within 120 days after it.

Adequate accounting means documentary evidence, such as receipts, for lodging, and for any other expense of $75 or more, along with a record of the time, place and business purpose. If the plan doesn’t meet the rules, it’s a nonaccountable plan and the payments are reported as wages on your Form W-2.

Mileage. Many employers reimburse at the IRS standard mileage rate. For 2026 the business rate was 72.5 cents a mile from 1 January. Announcement 2026-11 raised it to 76 cents a mile for business miles driven from 1 July 2026, citing recent increases in fuel prices.

What a receipt needs to show

The IRS’s general list for business expense records is a useful standard anywhere. A receipt or record should identify:

• the payee (the shop, hotel or restaurant);
• the amount paid;
• proof of payment;
• the date;
• a description that shows the expense was for business.

A card slip shows payment but not what was bought, so keep the itemised receipt as well. Write the business reason on the report: “Dinner with Harbor Supply buyers, Q4 order” is useful; “dinner” isn’t. In the UK, if your employer is VAT registered, a proper VAT receipt lets it reclaim the VAT, so ask for one.

Receipts fade, and paper gets lost. Our guide on how to photograph a readable receipt covers taking a copy that stays legible.

A simple expense report template

Here’s Daniel’s report for a two-day client visit in August 2026, after the US mileage rate changed. Copy the structure into a spreadsheet or document.

EXPENSE REPORT — August 2026

Employee: Daniel Reyes · Sales · Employee ID 2207
Trip: Client visit, Harbor Supply, Milwaukee · 12–13 August 2026

Date    Item               Business purpose                     Receipt   Amount
12/08   Hotel, 1 night     Client visit, Harbor Supply           #1       $189.00
12/08   Dinner (3 people)  Dinner with Harbor Supply buyers      #2        $86.40
13/08   Parking            Harbor Supply site visit              #3        $24.00
12–13   Mileage            180 miles × $0.76 (IRS rate)          log      $136.80

Total expenses                                                            $436.20
Less advance received                                                       $0.00
Amount due to employee                                                    $436.20

Employee signature:                      Approved by:

Check: $189.00 + $86.40 + $24.00 + $136.80 = $436.20. The mileage log (date, from, to, purpose, miles) is the evidence for the mileage line.

If you’re self-employed

A sole trader or freelancer has no employer to pay them back, so there’s no expense report in the usual sense. Two things replace it:

• Record business expenses for your tax return. In the UK, allowable expenses reduce your taxable profit, and simplified expenses let you use a flat rate for business vehicle mileage: 55p a mile for the first 10,000 miles in 2026 to 2027 (45p before 6 April 2026), then 25p. In the US, business expenses go on Schedule C, backed by the same kind of receipts listed above. Our guide to sales and purchase records shows how to keep that list.
• Re-bill costs to a client when your contract allows it. Put them on your invoice as a separate line, with the receipt available on request. The re-billed amount is part of your income, and the original cost is your expense.

If you run your own limited company, the company can reimburse you like any employee, with the same paperwork.

Building the report as you go with Binome360

Expense reports go wrong at the end of the month, with a pocket full of crumpled receipts. The easy fix is to record each cost when it happens. In Binome360 you snap the receipt: the amount and category are proposed, you add the purpose, and you confirm.

A separate assistant for work costs keeps them apart from personal spending. A monthly reminder (“on the 28th, submit my expense report”) takes one sentence. In a small team, a shared assistant lets everyone add their costs from their own phone. Binome360 doesn’t pay anyone back or send anything to your employer: it prepares the data, and you submit the report.

Frequently asked questions

Are expense reimbursements taxable?

Not when they follow the rules. In the UK, reimbursed business costs and payments at HMRC’s benchmark rates are exempt. In the US, reimbursements under an accountable plan aren’t wages. Payments outside those rules are taxed as pay.

What is the mileage rate for 2026?

UK: 55p a mile for the first 10,000 business miles from 6 April 2026, then 25p. US: 72.5 cents a mile from 1 January to 30 June 2026 and 76 cents from 1 July 2026.

How soon should I submit an expense report?

Follow your employer’s policy. In the US, the IRS fixed date method treats accounting within 60 days after the expense as reasonable, and excess advances returned within 120 days.

What if I lost a receipt?

Tell your employer and supply what you have, such as a card statement or booking confirmation. In the US, lodging and expenses of $75 or more need documentary evidence, so a missing receipt may mean the item can’t be reimbursed tax-free.

In short

An expense report ties each work cost to a receipt and a business reason, which is what keeps the reimbursement tax-free. In 2026, UK car mileage is 55p a mile for the first 10,000 miles and the US rate is 76 cents from 1 July. Self-employed people record expenses for their tax return or re-bill clients instead. First step: this month, photograph every work receipt on the day and write its purpose.

Sources

• GOV.UK, “Expenses and benefits for employers: exemptions and dispensations”: gov.uk.
• GOV.UK, “Expenses and benefits: business travel mileage for employees’ own vehicles: rules for tax” (approved mileage rates from 6 April 2026): gov.uk.
• GOV.UK, “Simplified expenses if you’re self-employed: vehicles”: gov.uk.
• IRS, Publication 463 (2025), “Travel, Gift, and Car Expenses”, chapter 6, Reimbursements: irs.gov.
• IRS, “Standard mileage rates” (2026: 72.5 cents from 1 January, 76 cents from 1 July), and Internal Revenue Bulletin 2026-29, Announcement 2026-11: irs.gov.
• IRS, “What kind of records should I keep”: irs.gov.

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