Last updated: 14 October 2026
Do you charge VAT on disbursements?
Not if they’re genuine disbursements. A disbursement is a cost you pay on your customer’s behalf, as their agent, for something the customer receives from a third party, such as a court fee or a Land Registry fee. You pass it on at cost without adding VAT and leave it out of your VAT return. But most recharged costs aren’t disbursements: if the cost is part of your own service, such as travel or postage, you must add VAT to it when you recharge it.
HMRC’s conditions for a disbursement
All of these must apply:
- You paid the supplier on your customer’s behalf, acting as their agent
2. Your customer received, used or had the benefit of the goods or services
3. Your customer was responsible for paying for them
4. Your customer authorised you to make the payment
5. Your customer knew the goods or services were from another supplier
6. You show the cost separately on your invoice
7. You pass on the exact amount you paid
8. The goods or services are clearly additional to what you supply on your own account
Disbursements vs recharged expenses
| Cost | Usually |
| Court and tribunal fees | Disbursement |
| Land Registry and search fees | Disbursement |
| Stamp duty land tax paid on behalf of a client | Disbursement |
| Your travel and hotel costs on a job | Recharged expense: add VAT |
| Postage, printing and phone calls | Recharged expense: add VAT |
| Subcontractor costs for part of your service | Part of your supply: add VAT |
| Mileage charged to a client | Part of your fee: add VAT |
How to show disbursements on an invoice
Show them separately, below the VAT total, labelled clearly as disbursements, with no VAT added. Name the supplier and keep a copy of their receipt on file. You can’t reclaim any VAT on the original cost, because the supply was to your customer, not to you.
Example
A solicitor charges a client £1,200 plus VAT for conveyancing and pays a £150 Land Registry fee and £3,000 SDLT on the client’s behalf. The invoice shows £1,200 + £240 VAT, then £3,150 of disbursements with no VAT. If the solicitor also charges £40 for train fares to meet the client, that’s part of the solicitor’s service, so it becomes £40 + £8 VAT.
Why it matters
Treating recharged costs as disbursements is one of the most common VAT errors HMRC finds in professional services firms. It can lead to underpaid VAT, interest and penalties. Equally, adding VAT to a genuine disbursement overcharges the client.
Train fares and other zero-rated costs
Even if the original cost had no VAT, such as a train ticket, it becomes part of your standard-rated service when you recharge it, so you add 20%.
Frequently asked questions
Can I reclaim VAT on a disbursement?
No, because the supply was made to your client.
Is a client’s stamp duty a disbursement?
Usually yes, when paid on their behalf.
Are expenses for staff travel disbursements?
No, they are part of your service.
Do disbursements count towards the VAT threshold?
No, genuine disbursements aren’t your turnover.
Related: issuing VAT invoices for expenses and reclaiming VAT on invoices paid for another business.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT on recharged costs. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
