Osome logoOsome logo
  1. Osome UK
  2. Business Vocabulary
  3. Reimbursement


Reimbursement is a repayment given by a company to someone for their out-of-pocket expenses; the amount of reimbursement is equal to the amount of money spent by this person. The person who receives a reimbursement can be an employee, a customer, or a third party.

Are you recording reimbursable expenses on your accounting books? You can do that yourself, but you don’t have to. Let our experienced accountants take over the job. We provide online accounting services, automated bookkeeping, and proactive tax support for busy entrepreneurs like yourself.

How is reimbursement different from other payments?

A person has to pay for something with their own money first to be paid a reimbursement later. So while all reimbursements are payments, not all payments are reimbursements.

In addition, unlike many other payments, reimbursements are usually not subject to taxation.

Examples of reimbursement

Insurance compensations

The insurance industry is probably what most people think of when they see the word “reimbursement”. Indeed, reimbursements are very common in this sphere. A person may receive a reimbursement for medical expenses, home or car repair on condition that he/she has been paying premiums prior to that.

The procedure for requesting a reimbursement may be different depending on insurance company, type of insurance, and situation. Sometimes, a policyholder may have all of the policy-covered expenses paid by the insurance company right away. Sometimes a policyholder may have to cover the expenses with their own money first and request a reimbursement later if urgent action is needed and there is no time to contact the insurance company.

Tax refunds

Another type of reimbursement payments are tax refunds which a person or business may be eligible for if they have paid more taxes than they owe. It may happen due to a variety of reasons, such as paperwork errors, changes in income level, loss of job, a downturn of business etc. If that is the case, then a governmental body responsible for taxation is obliged to give a person or business a refund.

Procedures and documents needed for getting a tax refund vary from country to country. If you pay taxes in the UK, you can look up the details on the UK Government website.

Business expenses

Reimbursement is also associated with business expenses, such as when an employee uses his/her own money to pay for tickets and accommodation when travelling for business purposes. The amount of reimbursement may depend on national and local labour legislation and company policy.

However many companies, especially big ones, offer reimbursements also for other expenses as a part of their corporate benefits packages designed to make their companies more appealing to current and potential employees. These can include commuting expenses, lunches, fitness programs, healthcare, college tuition fees if an employee needs additional training for work, and many more.

Author Francesca Del GiudiceFrancesca Del Giudice

2 min readOct 15, 2020

Get tips on
how to run your business smarter

Learn crucial tips on how to save money and build a flourishing business, with real entrepreneurs sharing their own experiences.

By clicking, you agree to our Terms & Conditions , Privacy and Data Protection Policy
Osome Newsletter

We’re using cookies! What does it mean?