Xero Payroll Settings – How to Add a Reimbursements Pay Item


When paying your employees, you may need to reimburse them for businesses expense they have paid for with their own money. This is done by using Reimbursement pay items. In this tutorial, we will set up a reimbursement pay item in Xero’s demo company.

Pay Items in Xero’s Payroll Settings

To add a reimbursement pay item, first go to the Pay Items tab of the payroll settings area:

  1. Go to Settings → Payroll in the main menu.
  2. Click on the Pay Items tab.


How to Add a Reimbursement Pay Item

On the Pay Items tab, you should see a number of pay items that have already been set up in the demo company. In the exercise, we will add a new reimbursement pay item called “Cleaning Costs”. To do this:

  • Select Reimbursements on the left-hand side.
  • Click on the Add button on the right-hand side.


A pop-up box will appear for you to enter the details of the new pay item. For this tutorial, complete the fields in the pop-up box as follows:

  • Reimbursement Name: type in Cleaning Costs.
  • Account: select 408: Cleaning from the list.


Click on the Add button when finished. You should now see Cleaning Costs in the list of Reimbursements pay items.


You’re All Set!

That’s it for this lesson. Find lots more helpful articles via the main menu or check out our main blog page here.