How to write an invoice

Whether you’re a sole trader just starting out or an established limited company, it’s important to get your invoicing right.

Here’s our step-by-step guide to writing an invoice for your UK business.

Whether you’re a sole trader just starting out or an established limited company, it’s important to get your invoicing right.

Here’s our step-by-step guide to writing an invoice for your UK business.

Emily Kindness

From the Business team

minute read

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Posted 24 SEPTEMBER 2021

What is an invoice?

An invoice is basically a request for payment for goods or services you’ve provided.

Writing an invoice correctly is essential for getting paid the right amount, on time. A clear, simple and accurate invoice helps avoid any issues or misunderstandings – it’s also the professional thing to do.

Invoices are essential for record-keeping and are important tax documents that show your income and sales. You can’t reclaim VAT using an invalid invoice, so if your documentation is wrong you could have very unhappy clients and face your own issues, too.

If you don’t know what to put on an invoice, we can tell you what’s usually required.

What details need to be on a UK invoice?

Gov.uk says that certain information must be included on UK invoices. These include:

Invoice date
A unique invoice number
Your company name, address and contact information
The name and address of the person or company you’re invoicing
A description of the goods or service/s you’ve supplied
The quantity of each type of item together with any rate of discount per item
The amount being charged
VAT amount (if applicable)
The total amount owed
Payment due date
Payment instructions and details

See an example of an invoice

Writing an invoice if you’re VAT registered

If you’re VAT registered, as well as what’s listed above, you’ll also need to include these on your invoice:

Your VAT registration number
The VAT rate charged per item – and if an item is exempt or zero-rated, you must make it clear that no VAT is charged on these items
Total VAT charged
The time of supply or tax point

What is the tax point?

The tax point is the date the transaction takes place, for VAT purposes. It can vary, but it’s usually the following:

Situation	Tax point
No invoice needed	Date of supply
VAT invoice issued	Date of invoice
VAT invoice issued 15 days or more after the date of supply	Date the supply took place
Payment or invoice issued in advance of supply	Date of payment or invoice (whichever is earlier)
Payment in advance of supply and no VAT invoice yet issued	Date payment received

The date of supply is:

for goods – the date they’re sent, collected or made available (for example installed in the customer’s house)
for services – the date the work is finished

What types of VAT invoices can be used?

Most companies will use the standard VAT invoice, but you may be able to use a simplified or modified invoice, depending on the invoice amount:

a simplified invoice for retail supplies under £250 – and for other supplies from 1 January 2013 – here you can leave off the date, the customer’s name and address, the total excluding VAT and the price and quantity of each item
a modified invoice for retail supplies over £250

Invoice information required	Full invoice	Simplified invoice	Modified invoice
Unique invoice number that follows on from the last invoice	ü	ü	ü
Your business name and address	ü	ü	ü
Your VAT number	ü	ü	ü
Date	ü	û	ü
The tax point (or ‘time of supply’) if this is different from the invoice date	ü	ü	ü
Customer’s name or trading name, and address	ü	û	ü
Description of the goods or services	ü	ü	ü
Total amount excluding VAT	ü	û	ü
Total amount of VAT	ü	û	ü
Price per item, excluding VAT	ü	û	ü
Quantity of each type of item	ü	û	ü
Rate of any discount per item	ü	û	ü
Rate of VAT charged per item – if an item is exempt or zero-rated, make clear there no VAT on these items	ü	ü*	ü
Total amount, including VAT	û	ü*	ü

*If items are charged at different VAT rates, you must show this for each item.

To keep HMRC happy you must:

issue paper or electronic invoices and keep valid invoices
keep copies of all the sales invoices you issue, even if you cancel them or produce one by mistake – you shouldn’t just bin them
keep all purchase invoices for items you buy

You can find more information on VAT invoices on the government website.

Step by step: How to create an invoice

These steps will help you create a professional invoice that’s easy to understand and HMRC-friendly.

Make sure you create your invoice promptly. Usually VAT invoices must be issued within 30 days of the date of supply of the goods or services, or if you’re paid in advance, the date of payment.

1. Display the word ‘Invoice’
Make sure you put the word ‘Invoice’ in a clear and prominent position on your document – usually at the top.

2. Company name, address and contact information
As well as your own company name, address and contact information (including email and phone number), you’ll also need to add your customer’s details.

If you’re a limited company, you’ll need to put your registered company name and address as well as your company registration number. If you want to add the names of your directors, you’ll need to list all directors on the invoice.
If you’re a sole trader, you should put your name, address and business name – if you have one.

3. Invoice number
Each invoice needs to have a unique identification number, so you can keep track of what’s been sent. The invoice number can include letters – for example, your customer’s initials. Put the numbers in increasing order, so they can be easily sorted by date.

4. Dates
These should include the date the invoice is issued, and the all-important due date – when the invoice is due to be paid. Unless you agree a payment date, the customer must pay you within 30 days of getting your invoice. You can set your own terms for payment, including discounts for early or upfront payments.

5. Description of goods or services
This doesn’t have to be a long-winded description – keep it short, snappy and clear to understand, so your customer knows exactly what they’re paying for.

You then need to fill in the quantity of each item and the price.

6. Amount owed
Once you’ve listed the goods or services, quantities and costs, you’ll need to add the total amount due. If you’re offering a discount, this should be listed, and the amount taken off the total amount due.

If you’re VAT registered, you’ll also need to include the VAT rate and add the VAT amount.

If you trade internationally and issue VAT invoices in a foreign currency or foreign language, you’ll need to:

show the total VAT payable in sterling on your VAT invoice, if the supply takes place in the UK
be able to provide an English translation of any invoice within 30 days if asked to do so by a visiting VAT office.

7. Payment terms and details
Set out your payment details, how you want to be paid and the types of payments you accept – for example, credit card, PayPal or bank transfer. In most cases, customers prefer to pay by direct bank transfer, so you’ll need to add your bank details:

Account name
Bank account number
Sort code
Reference – it’s easiest to use the invoice number

Use the invoice example below as a rough template guide:

INVOICE Your company name Address Contact details VAT number (if registered) To: Customer’s name/company Contact name Address			Your Logo
Invoice number: ABC001
Invoice date: 30 September 2021
Due date: 30 October 2021
Description	Qty	Unit price	Total
products	5	£100.00	£500.00
		Sub-Total	£500.00
		VAT @ 20% (if applicable)	£100.00
		TOTAL	£600.00
Payment term: 30 days
Payment details Account name Account number Sort code

How to send an invoice

The quickest, easiest and potentially cheapest way to send an invoice is by email, attaching your invoice in a non-editable PDF format. It’s worth asking your customer or client if there’s a particular person or email address to send it to and if there is anything that you need to include in the subject line to make sure it gets to the right person.

If you need to post an invoice, make sure you have the correct name and address. The accounts department may be located somewhere different from the warehouse you sent goods to.

You may need to set yourself a reminder to check that the invoice is paid and, if it isn’t, to chase up with a reminder.

Invoice software

Another option is to use invoicing software. As well as using a ready-made default template, some software apps let you create and send invoices directly from your iPhone or Android smartphone. Most invoicing apps also let you set up payment reminders and recurring invoices.

Some mobile-only banks also have invoicing software and can even chase invoices for you.