Your 2025 guide to company expense policies

Company expenses can get messy fast if there’s no clear policy in place. What counts as a business cost? Who needs to approve it? When do people get reimbursed? A well-thought-out expense policy answers all these questions upfront, saving time, avoiding tax headaches, and keeping teams happy. 

In this guide, we’ll explain how to create a fair, compliant, and easy-to-follow expense policy that works for UK businesses in 2025.

What is an expense policy?

An expense policy is a set of guidelines that define which business expenses are allowable, how employees should report them, and how reimbursements are handled. A good company expense policy balances financial control with employee happiness. It’s a clear framework for managing spend, minimising taxable income issues, and ensuring compliance with HMRC regulations.

Without a clear policy, you risk overspending, delays in reimbursements, and potential tax complications. With one in place, you get greater visibility, improved employee trust, and streamlined financial operations.

How to create an effective expense policy, step by step

1. Define the purpose of your expense policy

Start with a short statement explaining the aim of the policy: to control costs, ensure compliance, and support employees.

Example: 

“This expense policy is designed to support employees in making necessary business purchases while ensuring that company resources are used responsibly. It provides clear guidelines to manage business expenses, maintain tax compliance, and reduce the risk of overspending. By outlining what is reimbursable and how to submit claims, we aim to create a fair and efficient process for all employees.”

2. List allowable and unallowable expenses

Outline reimbursable expenses, such as overnight stays, travel, meals, and client entertainment, and be clear on what’s not covered (e.g. luxury upgrades).

3. Create clear expense categories and budgets

Separate expenses into categories:

• Travel: flights, accommodation, meals

• Transportation: car hire, taxis, mileage

• Office: supplies, equipment

• Entertainment: client meetings, events

Set spend limits for each and define unacceptable expenses. Tools like Airwallex allow you to enforce budgets in real-time. You can define custom limits, restrict merchant types, and get full visibility into employee and department-level spending across currencies.

4. Clearly explain and document expense policy for approval and reimbursement

Set up a straightforward process for expense approval and reimbursement. Employees should know which expenses need prior approval and what documentation is needed to be refunded quickly.

Pre-approval required: For travel, client entertainment over a certain amount, and learning and development expenses

Post-event approval: Suitable for smaller day-to-day costs such as office supplies or internal team-building activities

Set out what documentation is acceptable for claims. This might include itemised receipts, VAT invoices, or digital confirmations. 

Be clear on the required details:

• Date of purchase

• Amount (including currency if applicable)

• Description of the item or service

• Business purpose

We recommend asking employees to submit expenses within 30 days of incurring them. Setting a firm timeline helps avoid delays, ensures employees aren’t left out of pocket, and supports on-time financial reporting, especially when reclaiming VAT or closing month-end accounts.

Airwallex allows employees to upload receipts through a mobile app, auto-fill key fields using AI, and submit expenses for rapid approval. Once approved, expenses can be reimbursed on the same day, eliminating long waits.

5. Assign user roles and permissions

Define roles in your expense management system:

Expense users: Submit reports

Expense admins: Approve expenses, manage budgets and integrations

Airwallex supports this, allowing you to assign the right permissions to the right people. It’s designed to reduce delays, avoid confusion, and help teams work more efficiently.

6. Build in flexibility and address exceptions

Explain how to request exceptions and who can approve them. Be clear about the consequences of policy violations (e.g. delays, loss of reimbursement privileges, or disciplinary action).

Airwallex enables companies to customise expense controls by team, department, or role, providing flexibility where it’s needed and structure where it’s essential. Whether it’s configuring approval flows or adjusting card limits, businesses can adapt policies without manual workarounds.

7. Communicate and update the policy

Publish your policy, include it in onboarding for new employees, and update it regularly as your business grows. Be clear about how to access it, and let people know when it’s updated.

What matters most: Clarity, transparency, and compliance

Employees should feel the policy is fair and easy to follow. Explain why rules exist and how they apply equally. Include notes on:

• Tax-deductible expenses

• How the policy aligns with HMRC's guidelines

• Reporting responsibilities for expense admins and finance

• How expense management tools can help

With Airwallex, finance teams get built-in audit trails, secure storage of VAT invoices, and smooth integration with accounting systems like Xero. This reduces manual admin and improves compliance across the board.

How expense management tools can help

Manual processes can slow down reimbursement and frustrate staff. Expense management tools streamline:

• Expense report submissions

• Approval workflows

• Real-time spend tracking

• Integration with accounting systems

Airwallex goes a step further by using AI to automatically scan receipts, match invoices, and categorise transactions. As the system learns from your finance team’s input, it reduces errors and saves time, so your team can focus on higher-value work.

Streamline your expense management with Airwallex

Managing expenses shouldn't be a drain on time, morale, or resources. With Airwallex, you can offer your teams a faster, more transparent way to submit, approve, and reimburse expenses, no matter where they are in the world.

Staff will no longer need to chase finance teams or wait weeks for reimbursement. With same-day payments and automated approvals, they get their money back faster, with fewer hurdles. Team leads can set clear policies and spending limits without micromanaging, while finance gains full visibility and control without spreadsheets or delays.

Airwallex simplifies everyday business spend by consolidating card payments, bills, subscriptions, reimbursements, and procurement, all within one platform. You’ll avoid managing multiple vendors or reconciling expenses across systems.

It offers company cards for expenses like software subscriptions and advertising spend, and employee cards for expenses like travel or team events. If your company is running several business entities, separate expense accounts can be created and managed for each one. 

You can also:

• Set flexible policies per team or entity

• Track expenses in real-time

• Auto-sync with your accounting platform

• Capture and store HMRC-compliant records

And with built-in AI, receipt scanning and categorisation is handled automatically. It learns from your finance team’s edits and gets smarter over time.

Airwallex gives you:

• Full visibility and control over all expenses, with built-in checks that prevent misuse of funds

• A simplified reimbursement process so employees get paid quickly without unnecessary admin

• Customisable approval flows and spend categories that align with your internal policy

• User roles and permissions to control access and reduce delays in approvals

• A simple expense process from pre-approvals to final reconciliation, all in one place

If you're tired of fragmented processes and unclear policies, Airwallex gives you the control, flexibility, and global reach to modernise spend management, without compromising on speed or accuracy. Get a more streamlined approach to expense management.