Mastering Xero Expenses: A Guide for Employees

Managing expenses can be a breeze with Xero Expenses, whether you’re at your desk or on the go. This guide will walk you through using the desktop app, the phone app, and claiming mileage with Xero.

Using the Xero Expenses Desktop App

Log Into Xero: Open your web browser and go to Xero’s website.
Enter your login credentials to access your account.
Navigate to Expenses: Click on the ‘Business’ menu. Select ‘Expenses’ from the dropdown.
Add a New Expense: Click on ‘New Expense’ to start entering your expense details. Fill in the necessary fields such as date, amount, and category.
Attach Receipts: Use the ‘Attach Files’ option to upload a digital receipt or document. Ensure the receipt matches the expense details for accurate record-keeping.
Submit for Approval: Once everything is filled out, click ‘Submit’ to send the expense for approval.

Using the Xero Expenses Phone App

Download the App: Download the Xero Expenses app from the App Store or Google Play Store.
Log In: Open the app and enter your Xero login credentials.
Create a New Expense: Tap the ‘+’ button to add a new expense. Enter the expense details such as date, amount, and category.
Capture Receipts: Use your phone’s camera to take a picture of the receipt. Attach the image to the expense entry.
Submit for Approval: Review the details and tap ‘Submit’ to send it for approval.

Claiming Mileage Using the Xero App

Open the Xero Expenses App on your desktop or phone
Start a New Mileage Claim: Tap on the ‘+’ button and select ‘Mileage’ from the options.
Enter Trip Details: Input the start and end locations, and the app will calculate the distance. Specify the reason for the trip and any additional notes if necessary.
Review and Submit: Check all the details to ensure accuracy.
Tap ‘Submit’ to send the mileage claim for approval.

By following these simple steps, managing your expenses and claiming mileage on Xero becomes straightforward and efficient. Whether you’re at your desk or on the move, Xero Expenses keeps your financial records organized and up-to-date. Happy expensing!

What you need to know about VAT

Where possible we want to reclaim VAT on any expense that you incur on behalf of the business.

Reclaiming VAT on Expenses

Understanding when you can and can’t reclaim VAT on expenses is crucial for maintaining accurate expense claim records and maximizing your employer’s tax efficiency and cost control. Here is a quick guide:

When You Can Reclaim VAT

Business-Related Purchases: VAT can be reclaimed on expenses that are directly related to your business activities, such as office supplies, travel and subsistence expenses, and professional services.
Valid VAT Invoice: Ensure you have a valid VAT invoice from the supplier. This invoice should include the supplier’s VAT number and a breakdown of the VAT charged.
Partially Business-Related Expenses: If an expense is partially for business use, you can reclaim the portion of VAT that corresponds to the business use.

When You Can’t Reclaim VAT

Non-Business Expenses: VAT cannot be reclaimed on personal or non-business expenses, such as personal travel or entertainment.
Personal phone and broadband contracts: May be claimed as an expense and may indicate that VAT is included in the charges, BUT they rarely show the VAT number of the provider. Some invoices will even state, ‘THIS IS NOT A VAT INVOICE,’ meaning that you cannot reclaim VAT on these expenses. Your employer may repay the full value of the bill, but we can’t reclaim the VAT in the VAT return.
Certain Goods and Services: Some goods and services are exempt from VAT, such as insurance, postage, train and bus fares, some tolls and parking fees and you cannot reclaim VAT on these expenses. Private car parks may issue a VAT receipt meaning you can reclaim VAT on those spends.
Lack of Proper Documentation: If you don’t have a valid VAT invoice or receipt, you cannot reclaim VAT. Always ensure you keep thorough records.

Typical Spends That You May Want To Reclaim Via As Expense Claim

Expense Type	Tax Treatment BIK = Benefit in Kind
Subsistence: Expenses incurred by employees on meals, accommodation, and other necessary costs while travelling for business purposes. The point here is that the business has ‘sent’ the person away from their normal place of work and these costs are incurred away from the office.	VAT on subsistence can be reclaimed if it is a business expense and supported by valid VAT receipts. BIK: Provided the expenses are reasonable and necessary for business, there’s no BIK charge. Corporation Tax: These costs are usually deductible.
Staff Entertainment Staff entertainment refers to expenses incurred by a business for events or activities aimed at entertaining its employees. This can include Christmas parties, team-building events, or social gatherings (for birthdays, celebrations etc)	VAT: VAT on staff entertainment can be reclaimed if it is a business expense and supported by valid receipts. BIK: If the cost per head exceeds £150 annually, it may be taxable as a BIK for the employees. Corporation Tax: These expenses are generally deductible for corporation tax purposes.
Business Entertainment Client or supplier entertainment refers to the costs incurred in entertaining existing or potential clients, suppliers or potential investors such as meals, drinks, events, or hospitality. Staff can attend these functions, but the following rules still apply.	VAT: VAT on client entertainment is not reclaimable. BIK: There’s no BIK implication for the employees as the entertainment is provided to clients. Corporation Tax: These expenses are not deductible for corporation tax purposes.
Hotel/Accomodation When the business sends you away from your normal place of work and an overnight stay is necessary.	VAT: is recoverable if you can get a VAT receipt! These are normally available on checkout or by emailing the hotel after the event.

A note about VAT on hotel stays

Tax Point Date: The tax point, or the date when VAT is considered due, is the date of your stay at the hotel. This means that the VAT invoice or receipt will typically be issued upon check-out, not at the time of booking or check-in.
Reclaiming VAT: You can reclaim VAT on hotel stays if the stay is for business purposes and the hotel is VAT-registered. Ensure that the receipt includes a VAT breakdown and the hotel’s VAT number.
Documentation: Always request a detailed VAT invoice at check-out to ensure you have the correct documentation for any VAT reclaims. This invoice should reflect the actual dates of stay and the VAT charged.
Booking: When you book a hotel stay – you will often receive a booking confirmation. This is an order NOT an invoice – and even though it may confirm VAT is included in your charge – we CANNOT use it to recover VAT if the VAT number is not visible on the document. Sometimes a booking confirmation also includes a VAT receipt, and the VAT number is included in the document. In this case, we CAN recover the VAT!! The key is to pay attention – the devil is in the detail!

By keeping these guidelines in mind, you can ensure that your VAT reclaims are accurate and compliant with tax regulations. Always consult with your accountant or tax advisor if you’re unsure about specific expenses.

If you have any queries, just talk to your line manager!