Zoho Expense and Zoho Payroll: How business reimbursements flow into your pay run

Let's say it's the end of the month. Your sales manager has just submitted a clutch of receipts including, a client dinner, three hotel nights, 400 miles in her own car, and a train to London. Your finance team is logging each one into a spreadsheet, cross-referencing your expense policy, and working out what gets paid. Meanwhile, your payroll run is due in a few days. 
This is where things could go wrong, mainly because the tools weren't designed to talk to each other. Expense approvals live in one system. Payroll lives in another. Someone has to bridge that gap manually, and manual data transfer is where errors happen.

If you're a business owner, payroll admin, or HR manager dealing with exactly this friction, this article is for you. We'll cover how Zoho Expense and Zoho Payroll work together so that approved reimbursements flow directly into your payroll run. Neatly and correctly categorised, HMRC-compliant, and without the manual handoff.

What counts as a reimbursable business expense in the UK?

Not every cost an employee incurs is automatically reimbursable tax-free. HM Revenue & Customs (HMRC) defines allowable expenses as costs incurred wholly, exclusively, and necessarily in the performance of the employee's duties. That three-part test is the foundation, if you fail any part of it and the reimbursement may become a taxable benefit.

What typically qualifies:

• Business travel to client sites, temporary workplaces, or meetings away from the usual place of work
• Hotel stays and subsistence during overnight business trips
• Meals during business travel, within HMRC's Benchmark Scale Rates
• Business mileage in the employee's own vehicle, within HMRC's approved rates
• Professional subscriptions directly relevant to the role

Worth noting for 2026: HMRC has introduced new exemptions from 6 April 2026 to remove certain inconsistencies in how reimbursed expenses are taxed, including costs like eye tests that were previously taxable when reimbursed. If your expense policy hasn't been reviewed recently, now is a reasonable time to do it.

How Zoho Expense handles the approval side

Zoho Expense is Zoho's dedicated travel and expense management tool, built with UK compliance in mind. HMRC mileage rates, VAT tracking, and Making Tax Digital (MTD) support are all included.

For employees, the process is straightforward. They open the app, use Autoscan to photograph a receipt (it extracts the date, amount, and merchant automatically), and submit. For mileage, they swipe to start a journey. After which the app records the distance and applies the correct HMRC rate without any manual calculation.

For finance teams, the value is in what happens before a claim reaches the payroll run. You configure your expense policy inside Zoho Expense such as, spending limits by category, approval workflows, subsistence thresholds and the system enforces those rules at the point of submission. Out-of-policy claims are flagged before they reach anyone's inbox, not discovered during reconciliation.

A built-in fraud detection engine also scans reports for suspicious transactions: duplicate receipts, amounts out of range, claims that fall outside policy. Combined with a full audit trail on every submission, this is the kind of documentation HMRC expects to see if they ever ask questions.

When a report is approved, it's marked ready for reimbursement. That's where Zoho Payroll takes over.

So, this is how it goes: 

Expense submission → policy check → approval → payroll sync

How reimbursements flow into Zoho Payroll 

This is the part that solves the actual problem.

Once an expense report is approved in Zoho Expense, the amounts sync to Zoho Payroll for the relevant pay period. Your payroll admin doesn't need to transcribe figures from an email or re-enter data from a spreadsheet, it's already there, matched to the right employee and the right month.

Crucially, the integration carries the categorisation with it. Non-taxable reimbursements (qualifying travel, subsistence within HMRC rates, mileage within the approved rate) are processed without triggering Income Tax or National Insurance Contributions (NICs). Anything that might be taxable is flagged separately, so you know what may need to appear on a P11D.

The employee sees a clearly itemised payslip, reimbursements shown separately from salary, which ultimately reduces queries and makes it easy to resolve any that do arise.

Every processed reimbursement is logged with its full trail: the original claim, the approval, the amount, and the pay period.

Business mileage reimbursement: the HMRC rates you need to know 

Business mileage is one of the most common and most error-prone reimbursement categories for UK employers. The HMRC Approved Mileage Allowance Payment (AMAP) scheme sets the rate at which you can reimburse employees for using their own vehicle on business journeys, tax-free.

From 6 April 2026, the rates are:

There is an additional 5p per mile per passenger for fellow employees carried on business journeys.

Note: The car and van rate increased from 45p to 55p from 6 April 2026, the first change since 2011/12. For 2025/26 and earlier claims, the 45p/25p rates still apply.

Zoho Expense lets you set your mileage rate once, and the system applies it automatically, including tracking each employee's cumulative mileage against the 10,000-mile threshold and switching to the lower rate at the right point. For a team where mileage varies widely each month, this is much harder to manage accurately in a spreadsheet.

HMRC compliance: P11Ds and what's changing in 2027 

A quick overview of the reporting obligations that intersect with expense reimbursements:

• The P11D form is how employers report taxable expenses and benefits to HMRC that weren't processed through PAYE. If a reimbursement fails the "wholly, exclusively, and necessarily" test, it likely goes on a P11D.

• Late P11D submissions trigger automatic penalties of £100 per 50 employees per month.

• If your current payroll management software doesn't support payrolling of benefits, it's worth assessing that now rather than scrambling in 2027.

Note: Zoho Payroll supports payrolling of benefits, so you can make the shift well before it becomes mandatory.

The way forward 

If expenses and payroll are currently managed through separate tools or spreadsheets, here's a practical starting point:

• Review your expense policy against HMRC's "wholly, exclusively, and necessarily" test

• Update your mileage rate to the current AMAP figure (55p/mile for cars and vans from 6 April 2026)

• Confirm whether taxable benefits are being reported via P11D or payrolled

• Check whether your payroll software will support mandatory payrolling of benefits from April 2027

• Assess whether connecting your expense and payroll software for employers would remove manual steps from your monthly run, mostly it would

The goal isn't more software. It's fewer manual steps between an approved expense and a correctly processed payslip, and a clean audit trail to back it up.

About Zoho Payroll 

Zoho Payroll is part of Zoho's suite of 55+ integrated business applications, trusted by over 150 million users across 150+ countries. As payroll software for small business and larger teams in the UK, it handles PAYE calculations, payslip generation, and RTI submissions, payrolling benefits to HMRC. Paired with Zoho Expense, you get a connected system where approved reimbursements move into your payroll run automatically, no manual handoff required.

Frequently Asked Questions 

• Are employee expense reimbursements taxable in the UK?

It depends on the expense. Costs that meet HMRC's "wholly, exclusively, and necessarily" test are generally tax-free. Reimbursements that fail that test, or amounts paid above approved rates, are taxable and need to be reported to HMRC.

• What is the current HMRC mileage rate for employees using their own car?

From 6 April 2026, the AMAP rate for cars and vans is 55p per mile for the first 10,000 business miles, then 25p per mile. This was the first increase since 2011/12. For 2025/26 and earlier claims, the 45p/25p rates apply.

• Can I include expense reimbursements in the regular payroll run?

Yes, and it's generally the cleaner approach. Employees receive everything in one payment with clear payslip itemisation, and your records are easier to reconcile. Payroll software that integrates directly with your expense tool makes this straightforward.

• What is a P11D and when do I need to file one?

A P11D is the HMRC form for reporting taxable expenses and benefits not taxed through PAYE. The filing deadline is 6 July following the end of the tax year. From April 2027, most benefits will be payrolled instead, making P11Ds largely redundant, but the P11D(b) NIC declaration will remain.

• Does ordinary commuting count as a tax-free reimbursable expense?

No. HMRC explicitly excludes the home-to-permanent-workplace journey from the definition of business travel. If you reimburse it, the amount is treated as taxable income for the employee.