Expenses, reimbursements and per diems

Understand work-related costs and what to keep track of

Freelance work can involve costs such as travel, accommodation, meals, materials, equipment and access support. Sometimes you pay these costs yourself. Sometimes an engager agrees to repay them. On other jobs, you may receive a fixed daily allowance or per diem.

These arrangements can affect what you earn from a job, what you need to agree in advance and which records you should keep.

This page will help you:

• understand the difference between an expense, a reimbursement and a per diem;
• ask what an engager will pay for before accepting work;
• keep useful records of costs connected with your freelance work; and
• find current HMRC guidance about allowable business expenses.

Already using bookkeeping or accounting software?

You don't need to record everything twice.

If you already use bookkeeping or accounting software to keep track of your freelance income and expenses, including software you use for Making Tax Digital, keep using that as your main financial record.

This resource is simply here to help you understand what you may need to keep track of and what you might want to check with HMRC or discuss with an accountant.

1. Expenses, reimbursements and per diems: what is the difference?

These terms are sometimes used interchangeably, but they describe different arrangements. Understanding which one applies can help you calculate the real value of a job and avoid unexpected costs.

Per diems

A per diem is a fixed daily allowance, often provided when work requires you to travel or stay away from home. It may be intended to cover meals, local travel or other day-to-day costs.

The amount and what it covers should be agreed in advance. A per diem is not necessarily additional pay, and describing a payment as a per diem does not automatically make it tax-free.

Example: While working away from home on tour, you receive an agreed daily amount towards meals and other subsistence costs.

The important question is not simply what the payment is called. Check who is responsible for each cost, what evidence is required and how the arrangement is recorded in your agreement or contract.

2. Before accepting the work

Work-related costs can make a significant difference to what you actually earn from a job. Before accepting an offer, ask which costs you will need to cover yourself and which will be paid or reimbursed by the engager.

Try to get the answers in writing as part of your agreement or contract.

Questions to ask

• Travel: Will any travel be booked or paid for, and are there limits on routes, fares or mileage?
• Accommodation: If the work requires an overnight stay, who will arrange and pay for it?
• Meals and subsistence: Will these costs be reimbursed, or will you receive a per diem?
• Per diems: How much is the daily allowance, which days qualify and what is it intended to cover?
• Materials and equipment: Are you expected to provide or purchase anything for the work?
• Access costs: How will any agreed access support or additional access-related costs be arranged and paid for?
• Spending limits: Do you need approval before incurring a cost, and is there a maximum amount?
• Claiming costs: What evidence will you need, where should you send it and when will you be repaid?

Be particularly careful when an offer says that a fee is “inclusive of expenses”. This usually means you will be expected to cover the relevant costs from the amount offered.

Estimate those costs before accepting the work so that you can understand the likely value of the job after expenses.

For a wider check covering the fee, contract, cancellation terms, access, safety and other working arrangements, use Before you accept: twelve questions.

3. Keeping track of your business expenses

If you are self-employed, keeping track of the money you spend on your work can help you understand what your freelance practice costs, set realistic fees and prepare your tax records.

HMRC allows certain business costs to be deducted when calculating taxable profit. The rules depend on what the cost is for and whether it is used wholly for your business. If something has both business and personal use, you may only be able to claim the business proportion.

The examples below are starting points for your records, not a definitive list of allowable expenses.

Materials and production costs

This could include materials, props, printing, scripts, scores, sheet music, consumable supplies or other items used to create, prepare or deliver your work.

Keep receipts and make a short note connecting the purchase to the relevant project or part of your freelance practice.

Marketing and professional development

This could include website costs, portfolio materials, casting profiles, showreels, headshots, advertising, networking costs or training connected with your existing freelance work.

The tax treatment of training can be particularly specific. Training that updates or develops skills used in your existing business may be treated differently from training that prepares you to begin a new trade or profession.

Don't see something here? That's fine. This isn't intended to be a complete list. Different freelance roles involve very different costs, so keep track of anything you spend in connection with your work and check separately whether it can be treated as an allowable expense for tax purposes.

Record the cost while it is fresh

For each cost, it can be helpful to record:

• the date;
• the supplier or person you paid;
• what you purchased;
• the amount and how you paid;
• which job or part of your freelance work it relates to;
• whether it also has any personal use;
• whether the engager will reimburse you; and
• where you have stored the receipt or other evidence.

Recording a cost does not mean you have decided how it should be treated for tax. It gives you, your accountant or your tax adviser the information needed to make that decision later.

Use HMRC’s guidance on expenses if you are self-employed to check the current categories and rules.

4. Travel, accommodation and subsistence

Freelance performing-arts work may require you to travel to different venues, rehearsal rooms, studios, workshops or locations. You may also need to stay away from home or buy meals while travelling.

These costs can quickly affect the real value of a job. Agree who will pay for them before accepting the work and keep a clear record of what each journey or stay was for.

Travel costs

Costs you may need to record include:

• train, bus, coach, tram, underground, air or ferry fares;
• taxi or private-hire fares;
• business mileage in your own vehicle;
• vehicle hire;
• parking, tolls and congestion charges;
• transporting equipment, instruments, costumes or materials; and
• local travel while working away from home.

For each journey, record the date, starting point, destination, purpose and cost. If you use your own vehicle, keep a mileage record that identifies the business journey rather than relying only on fuel receipts.

Fines and penalties are not allowable business expenses, even if they arise during a work journey.

Accommodation

If work requires you to stay away from home, establish whether the engager will book the accommodation, reimburse you or expect you to arrange and pay for it yourself.

Before agreeing, check:

• which nights are covered;
• whether there is a spending limit;
• whether breakfast or other meals are included;
• how far the accommodation is from the workplace;
• whether local travel will be provided or reimbursed;
• what accessibility, safety or privacy requirements need to be met; and
• what happens if the booking is cancelled or the work dates change.

If you arrange the accommodation yourself, retain the booking confirmation, invoice or receipt and note which job and working dates it relates to.

Meals and subsistence

Subsistence generally refers to necessary day-to-day costs connected with qualifying work travel, particularly meals and other costs incurred while travelling or staying away.

A meal bought during a working day is not automatically a business expense. Whether a cost qualifies can depend on the journey, your working arrangements and whether you are staying away from your usual base.

Record:

• the date and amount;
• what the cost was for;
• the journey, stay or job it related to;
• whether you paid it personally;
• whether it was covered by a per diem; and
• whether the engager reimbursed it.

Touring and working away from home

Touring arrangements vary considerably. One engagement may provide travel, accommodation and meals, while another may offer a fee plus a daily allowance or expect you to arrange some costs yourself.

Ask for a written breakdown showing:

• which journeys are provided or reimbursed;
• whether travel days are paid;
• what accommodation is provided and whether you will share;
• whether breakfast or other meals are included;
• the per diem or subsistence rate;
• which days the allowance applies to;
• how local travel and baggage costs are handled; and
• when any reimbursed costs or allowances will be paid.

Keep this information with your contract or agreement so that you can check payments and raise any differences promptly.

PRACTICAL EXAMPLE

Example: a week of work away from home

You accept a week of work at a venue in another city. The engager books your hotel and reimburses your return train fare when you provide a receipt. You receive a fixed daily amount for meals, but you must pay for travel between the hotel and venue yourself.

Before accepting, you would need to understand whether the fee covers that local travel, how much the daily allowance is, which days it applies to and when your train fare will be repaid.

For your records, keep the written agreement, train receipt, reimbursement claim, details of the daily payments and records of any other costs you paid yourself.

For current tax rules, see HMRC’s travel guidance for self-employed people. If you are engaged as an employee, see HMRC’s guidance on travel and overnight expenses for employees.

5. Understanding per diems

A per diem is a fixed daily allowance, commonly offered when work requires you to travel or stay away from home. It may be intended to contribute towards meals, refreshments, local travel or other day-to-day costs.

Per diem arrangements vary between engagements. The amount may be set by the engager, a union agreement, an industry agreement or the individual contract.

Check what the allowance covers

Do not assume that the term “per diem” has the same meaning on every job. Ask for a written explanation of which costs the allowance is intended to cover.

For example, it might cover:

• breakfast, lunch and evening meals;
• refreshments during the working day;
• travel between your accommodation and workplace;
• laundry or other costs arising from a longer stay; or
• a combination of these costs.

Check whether accommodation and longer-distance travel are being arranged or reimbursed separately.

Questions to ask

• Rate: How much will you receive for each qualifying day?
• Eligible days: Does it apply to rehearsal, performance, rest and travel days?
• Part-days: Is a reduced rate paid on arrival, departure or shorter working days?
• Included meals: Is the allowance reduced when breakfast, lunch or another meal is provided?
• Other costs: Are accommodation, longer journeys and local travel paid separately?
• Location: Does the rate change between UK and overseas destinations?
• Payment: Will it be paid in advance, alongside your fee or after the work?
• Evidence: Are receipts or any other records required?
• Cancellation: What happens to the allowance if dates change or work is cancelled after costs have been incurred?

Is there a standard per diem rate?

There is no single per diem rate that applies to every freelance performing-arts engagement. Relevant union agreements, collective agreements, ratecards or organisational policies may set or recommend particular allowances.

HMRC also publishes benchmark and overseas scale rates that employers may use for qualifying employee expenses. These are tax rules for particular payment arrangements, not general minimum rates that every freelancer is entitled to receive.

If an engager refers to an agreement, ratecard or HMRC rate, ask them to identify the source and confirm how it applies to your engagement.

Keep a clear record

Keep the per diem arrangement with your contract or booking confirmation. Record:

• the agreed daily rate;
• what the allowance was intended to cover;
• the dates and locations it applied to;
• any reduced or excluded days;
• any meals, accommodation or travel provided separately;
• the amount you actually received and when it was paid; and
• receipts or records of relevant costs, where appropriate.

Keeping these details will help you check that you have been paid correctly and provide useful information when preparing your financial and tax records.

PRACTICAL EXAMPLE

Example: a touring allowance

You are offered a weekly fee for touring work, with accommodation and travel between venues provided separately. The engager also offers a daily per diem towards meals and local travel.

Before accepting, you check whether the allowance applies on travel and rest days, whether breakfast provided by the hotel affects the amount, who pays for travel between the hotel and venue, and when the allowance will be paid.

Your contract records the fee and per diem separately. You retain the agreement, payment records and details of the relevant costs so that you can check what you received and seek tax guidance if needed.

If your engagement is covered by a union or collective agreement, check its current touring and subsistence provisions. For tax information, see HMRC’s guidance on employee travel and subsistence and HMRC’s travel guidance for self-employed people.

6. When an engager reimburses your costs

A reimbursement is a payment made by an engager to repay an agreed cost you have incurred for the work. This might include travel, accommodation, materials, equipment hire or another cost approved in advance.

Reimbursements should be agreed separately from your fee wherever possible. This makes it clearer which costs the engager will cover and helps you check that you have been paid correctly.

Get approval before incurring the cost

Do not assume that an engager will repay a cost simply because it was necessary for the job. Ask for written approval before booking, buying or committing to anything substantial.

Confirm:

• which costs will be reimbursed;
• whether you need approval before spending;
• any maximum amount or spending limit;
• whether a particular supplier, route or type of ticket must be used;
• whether the reimbursement covers the full cost;
• what evidence you must provide;
• how and where to submit the claim;
• the deadline for submitting it; and
• when you should expect to be repaid.

Check whether costs are separate from your fee

An offer may describe expenses in different ways. For example:

• Fee plus agreed expenses: approved costs are paid in addition to your fee.
• Fee inclusive of expenses: you are expected to cover the relevant costs from the amount offered.
• Expenses capped at a set amount: the engager will repay approved costs only up to the agreed limit.
• Expenses by prior approval: costs will only be repaid if permission was given before you incurred them.

Ask for clarification if the offer or contract does not make the arrangement clear. A fee can appear reasonable but become much less viable once travel, accommodation or other necessary costs are deducted.

Submit the claim clearly

Follow the process specified by the engager. You may be asked to use an expenses form, include the costs on your invoice or submit them separately.

Your claim should normally identify:

• your name and contact details;
• the production, project or engagement;
• the date and purpose of each cost;
• the amount being claimed;
• any relevant approval or reference number;
• the total amount due; and
• the receipts or other evidence attached.

If costs are included on an invoice, list them separately from your professional fee rather than combining everything into one unexplained total.

Keep evidence of the cost

Depending on the arrangement, the engager might ask for:

• receipts or invoices;
• tickets or booking confirmations;
• a mileage record;
• proof of payment;
• written approval for the cost; or
• a completed expenses form.

Approval evidence and purchase evidence are different

A quote, online basket, price screenshot or provisional booking can help an engager approve a cost before you spend, but it does not normally prove what was ultimately purchased or paid for.

After incurring the cost, keep the final itemised receipt, supplier invoice, ticket or booking confirmation and proof of payment, as appropriate. If the engager needs evidence for its VAT records, ask before spending whether it requires a valid VAT invoice and what details must appear on it. A card slip, bank transaction, quote or screenshot may not be enough on its own.

If you are unsure what evidence will be accepted, check with the engager before committing to the purchase.

Photograph or download receipts promptly, particularly when paper receipts may fade or be lost. Keep a copy of everything you submit.

If a receipt is unavailable, contact the engager before submitting the claim. They may accept alternative evidence, but this should not be assumed.

Record the cost and reimbursement separately

Keep a record of:

• the original cost and when you paid it;
• the job or project it related to;
• the amount you claimed;
• when and how you submitted the claim;
• the amount reimbursed;
• when the reimbursement reached you; and
• any difference between the amount claimed and the amount repaid.

This will help you identify outstanding payments and provide the information needed when preparing your financial records.

PRACTICAL EXAMPLE

Example: materials purchased for a project

An engager asks you to purchase materials for a project and agrees in writing to reimburse costs up to £100. You spend £82 and retain the itemised receipt.

You submit the receipt using the engager’s expenses form before the stated deadline. You keep copies of the approval, receipt and completed claim, then record the date the £82 reimbursement reaches your account.

Your professional fee remains separate from the materials cost, making it easier for both you and the engager to understand what has been charged and paid.

If you need to invoice for your fee or include agreed costs on an invoice, use our Invoice template and invoice checklist.

7. Records and receipts to keep

Good records help you understand your freelance finances, prepare invoices and tax returns, check that you have been paid correctly and respond if HMRC asks about information in your return.

You do not need an elaborate system. The important thing is that your records are accurate, complete, readable and organised well enough for you to identify the income and costs connected with your work.

Keep records of money coming in and going out

Depending on your work and circumstances, your records may include:

• invoices you send;
• payments and other business income you receive;
• receipts and invoices for business costs;
• bank statements and payment-service records;
• contracts, booking confirmations and written agreements;
• travel and mileage records;
• accommodation and transport bookings;
• per diem and allowance arrangements;
• expenses forms and reimbursement claims;
• records showing when reimbursements were received;
• credit notes, refunds and cancelled invoices; and
• relevant emails approving costs or changing an agreement.

If you are VAT registered, employ other people, operate through a limited company or have another business structure, additional record-keeping rules may apply.

Make the purpose clear

A receipt shows what you purchased, but it may not explain why the cost was connected with your work. Add a short note while the information is fresh.

For example:

• the production, project or client;
• the purpose of the purchase or journey;
• who approved the cost;
• whether the cost had any personal use;
• whether it was paid from a personal or business account;
• whether you claimed reimbursement; and
• whether a per diem or allowance was intended to cover it.

This makes it easier to understand the transaction later and to distinguish your own business costs from costs repaid by an engager.

Choose a system you can maintain

Records may be kept on paper, digitally or through bookkeeping software, subject to any digital record-keeping rules that apply to you.

Your system might include:

• a spreadsheet recording income and spending;
• clearly named folders for each tax year or project;
• scanned or photographed receipts;
• downloaded invoices and booking confirmations;
• bookkeeping or accounting software; and
• a separate bank account used for freelance activity.

A separate business account is not a substitute for keeping records, but it can make business transactions easier to identify.

Store records safely

Paper receipts can fade, and emails or online booking records may become difficult to retrieve. Save useful evidence promptly rather than relying on it remaining available in an inbox, app or client portal.

Use clear filenames and keep a backup of important records. Make sure that personal, financial and access-related information is stored securely and is only shared when necessary.

If you photograph or scan a receipt, check that the supplier, date, items and total amount are readable before disposing of the original. Keep the original where another rule, warranty, agreement or claim process requires it.

If you lose a receipt or other evidence

Try to obtain a replacement from the supplier or retrieve the transaction from your email, account or booking history.

Other records, such as a bank statement, may help show that a payment was made, but they may not explain what was purchased or why it related to your work.

Record what happened and retain any alternative evidence. If you are unsure whether you have enough information to include the cost in your tax records or a reimbursement claim, check with HMRC, the engager or a suitably qualified adviser as appropriate.

Build a simple routine

Keeping records little and often is usually easier than rebuilding a year of activity shortly before a deadline.

A regular routine might include:

• saving or photographing new receipts;
• recording income and spending;
• matching payments to invoices;
• checking outstanding fees and reimbursements;
• adding notes to transactions that are not self-explanatory;
• checking bank and payment-service statements; and
• backing up important files.

Choose a weekly or monthly rhythm that is realistic for your workload and keep everything in a consistent place.

Making Tax Digital

Making Tax Digital for Income Tax introduces digital record-keeping and reporting requirements for some sole traders and landlords. Whether and when it applies depends on your qualifying income and other circumstances.

If it applies to you, your existing paper or spreadsheet system may need to change so that qualifying records are created and maintained using compatible software.

For an introduction to the phased start dates and qualifying-income rules, see Registering and your first 30 days. You can also use HMRC’s checker to find out whether and when Making Tax Digital applies to you.

8. Where to check the current rules

This resource provides a practical introduction, but tax rules and individual circumstances vary. Use current guidance when deciding how a payment or cost should be recorded or treated.

The following links are useful starting points.

Who can help?

The right source of support depends on the question you need to answer.

• HMRC: Contact HMRC if you need help understanding its guidance, using Self Assessment or Making Tax Digital, or dealing with your tax account.
• An accountant or tax adviser: Seek suitably qualified professional advice if you need guidance based on your individual income, expenses, business structure or VAT position.
• Your union or professional association: They may be able to explain the expenses, touring or subsistence provisions in an agreement or ratecard covering your work.
• The engager: Ask the person booking or contracting you to clarify what they will pay, what evidence they require and how their reimbursement process works.

Contacting HMRC

HMRC’s contact service can direct you to the appropriate team for questions about Self Assessment, Income Tax, VAT, Making Tax Digital and other tax matters.

Find the correct HMRC contact

If a health condition, disability or difficult personal circumstances make it harder to deal with HMRC, you may be able to receive additional help from its Extra Support Team.

Find out about extra support from HMRC

If you are worried about paying tax

Do not ignore a tax bill or wait until the situation becomes unmanageable. Contact HMRC as early as possible to discuss the available options.

Free, independent support is also available from Business Debtline. Keep copies of correspondence and notes of any payment arrangement you agree.

Expenses, reimbursements and per diems: the essentials

• Check which costs you will need to cover before accepting the work.
• Agree fees, expenses, reimbursements and per diems clearly and in writing.
• Do not assume that a cost will be repaid unless the engager has agreed to it.
• Check what a per diem covers and which working, travel or rest days qualify.
• Keep the original cost and any reimbursement clearly identified and linked in your records.
• Save receipts, approvals, agreements, mileage records and payment information.
• Do not assume that every work-related cost is allowable for tax.
• Use current HMRC guidance or seek qualified advice when you are unsure.