Why is tax being charged on the travel costs I added to my photography invoice?

The numbers

A Dubai photographer covered an event in Abu Dhabi for a 2,500 AED fee and added 300 AED for a day's transport and hotel. He typed 5 in the rate field, the figure he applies in his situation.

Of that tax, 125.00 is on the fee and 15.00 on the expenses. For the fee alone the invoice would total 2,625.00. Adding the costs as a line raised the tax by fifteen dirhams.

Why the tool cannot exempt one line

The Basic invoice generator is a simple template with a single tax rate. There is no per-line tax column and no 'exempt' option for a line. That limit is stated on the tool page; the aim is maths you can trust, not coverage of every tax situation.

So what are your options?

Start by asking your accountant how costs you pass on to a client are treated in your case. The answer decides the route:

• If they are treated as part of the service, the current setup is fine; leave the line as it is.
• If they must stay untaxed, do not put them on the same invoice as the fee, because the tool cannot exempt them. Invoice the fee with tax, and the expenses on a separate document with no tax rate.
• If you want to show the client the costs in detail, gather the receipts into a summary with the Expense summary generator and attach it.

A related catch: the discount covers everything too

Just as tax applies to the whole subtotal, so does a discount. Give 10% off meaning the fee only, and it also comes off the expenses, so you lose part of your travel cost. In that case enter the discount as a fixed amount worked out on the fee alone, or lower the fee line directly.

Either way, describe the expense line clearly, such as 'Transport and hotel, Abu Dhabi, 12 September', so the client knows what they are paying for.