What is Disbursement?

A disbursement is a payment you make on behalf of your client which you then reclaim through your invoice. The crucial distinction is that the supply is made to your client, not to you — you are merely acting as an agent paying on their behalf.

• **Disbursements vs recharges (expenses):**
• This distinction matters for VAT:
• Disbursement: (true): The supply is made directly to the client, you just pay it on their behalf. You pass it on at **exact cost** with **no VAT** added (regardless of your VAT status), because you are not making a supply — you are recovering a payment.
• Recharge/expense: You buy something for use in providing your service. You recharge the cost to the client as part of your supply, and you **must add VAT** (if VAT-registered).

HMRC's conditions for a true disbursement: - You acted as the client's agent when paying - The client received and used the goods or services - The client was responsible for paying (you just facilitated it) - The client authorised you to make the payment - You recover only the exact amount paid — no markup - You show the disbursement as a separate item on your invoice

Common examples of true disbursements: - A solicitor paying court fees or Land Registry fees on behalf of a client - An accountant paying Companies House filing fees for a client - A contractor paying planning application fees on a client's behalf

Common examples that are NOT disbursements (they are recharges): - A designer buying stock photos used in a client project - A builder purchasing materials to use on a job - A consultant booking travel to attend a client meeting