What are the invoice requirements for the UK?

October 7, 2020

It’s important to know what you’re doing when putting together invoices for your clients. An incorrect invoice can delay payment, cause confusion and negatively affect your relationship with your client.

Getting it right the first time can make a big difference. So here’s what we’ll be covering in this invoice requirements guide:

Why are invoices important?

Invoices are an essential part of doing business, whether you are a sole trader, freelancer, small business or limited company.

Invoices are basically a request for payment and will contain information such as your deliverables, the due date and agreed payment terms. Invoices are different from receipts, which are just a confirmation of payment.

Every invoice you send is a tax document that acts as a proof of income, so make sure to save them in case you ever need to show them to HMRC.

Whether you’re working in construction or hospitality your invoices need to contain certain a number of particulars if they are to be valid in the UK.

Invoice requirements

1. Correct specifications

According to HMRC’s website, the following information needs to be on your invoice/purchase order:

  • A unique identification number (like an invoice number)
  • Your company name, address and contact information
  • The business name and address of the customer you’re invoicing
  • A clear description of the goods you’re charging for
  • The date the goods or service were provided (supply date)
  • The date of the invoice
  • The amount(s) being charged
  • VAT amount if applicable
  • The total amount owed

If you are VAT registered, then you’ll need to have these details on there too (the VAT invoice format is similar). You must include the:

  • VAT number
  • Tax point (time of supply)
  • Unit price per item (excluding VAT)
  • Total amount (excluding VAT)
  • Total amount of VAT payable
  • Item quantity and discount rate (if applicable)
  • Rate of VAT charged per item
  • Total amount including VAT

In addition to those details, you may also want to add instructions on how to pay and provide payment terms.

Get started: try Pomelo Pay for free!

2. Deliverables

The clearer your invoice, the easier it will be to get paid and maintain an ongoing relationship with your customer or client.

Make sure your deliverables are as specific as possible and not too general. Include the invoice date the deliverables will be completed by, when payment is due and any other information your client would need to know about your product or service.

3. Type of invoice

There are different types of invoices. Make sure you are issuing the right type in the correct format.

If you’re sending an invoice in exchange for a product or services, then you are issuing a sales invoice. If VAT is included, then it’s usually called a tax invoice.

There are a few other types of invoices that may be useful, such as:

Interim invoices: if the job is a long project that requires several payments, you may issue interim invoices (typically in construction).

Recurring invoice: if you are providing a recurring service or product, you may be issuing recurring invoices (such as subscriptions).

Commercial invoice: this type of invoice is used to calculate customs on imported goods, and makes the sale official.

Credit note: these are used to reverse a charge from a previous invoice, if you’re returning an item or you’ve overcharged a customer.

4. Invoice number

Adding a unique number to your invoice makes it easy to keep track of all your records and find them whenever necessary. The simplest method is to use sequential numbers that increase with every invoice.

You may also choose to issue invoice numbers with letters if you are issuing consecutive invoices for one client. If your client was Sainsbury’s, for example, you would use "SAIN001", for your first one.

5. Payment method

Adding instructions on how to pay, will make the payment easy and smooth for your client or customer. Some invoicing software will allow you to add a “Pay Now” button that integrates with a payment solution, making it easy for your customer to pay with just one click.

You can also add a section on your invoice under “Terms” that outlines your preferred method of payment along with your bank account details, address and full name. If you are sending your invoice abroad, make sure to add your IBAN/BIC.

With Pomelo Pay, you can send your customer a payment link, allowing them to complete payment on the spot just by filling in their debit/credit card details.

It’s more secure than taking card details on the phone, and your customer will have peace of mind that their card details are safe.

Read more: 5 reasons why your business should be using Payment Links.

UK invoice example

Here is an example of an invoice from the FreeAgent website (they offer some free templates to download):

freeagent invoice template invoice requirements

How to write an invoice

Remember that your invoice represents your business, so it’s worth putting some effort into how your invoice appears so it looks professional.

You can choose to add your logo, your tagline and anything you feel represents your business best.

We put together some practical tips to follow so your invoicing process goes as smoothly as possible.

Use an invoice template

Keep on top of your record keeping and make use of invoice templates. This will make it quick and easy to send future electronic invoices, and it means you won’t need to keep copying and pasting the details every time.

You can choose to follow a simplified invoice template on Microsoft Word, through a spreadsheet or an invoicing software such as Xero or FreeAgent.

Remember to create the invoice in the first place (many businesses forget), and remember to adjust and check the unique invoice number, deliverables and any other details that may need updating before sending it over.

Using invoicing software can speed up this process by automatically adjusting the invoice number, updating customer details and sending late payment reminders.

When to send your invoice

The sooner you send your invoice, the less time you’ll need to wait to get paid. The most straightforward answer to “when should I send my invoice” is simply: when you have delivered your goods.

However, this can depend on the specific products and services you offer. If you are covering a longer project, you may need to send interim invoices and recurring invoices as well.

It’s also worth asking your client when the cut-off date is for submitting an invoice so you can then get paid when a company completes its payment runs. This usually happens at the end of the month.

Call your customer or client when you send your first invoice to make sure they’ve received it and don’t have any issues with the payment methods.

How to send your invoice

The easiest and most convenient way to send your invoice is by email. A universally accepted format is the PDF. Avoid sending it with Word or Excel, as it can make the document unreadable for the receiver.

When you send over the email, make sure the subject is clear and concise and includes the invoice you are sending. You can also choose to send your invoice through the post if that’s necessary.

How to get paid on time

Chasing late payments can drain a lot of your time and energy. For this reason, it’s best to have clear terms and conditions, along with an agreement in writing on the specific payment terms.

If it’s a large project that requires more money, consider breaking up the project into smaller invoices to lower the risk.

One of the best ways to get paid on time is to send your payment request via a payment link. By sending a link directly to a client’s phone number, it’s much less likely they’ll forget to pay.

David Fox is an EPC consultant and goes to his client’s homes to complete an energy performance certificate. Before payment links, nine times out of ten, nobody paid David’s invoices on time. This meant he spent more time than necessary chasing up invoices.

Ever since he switched to payment links, David gets paid almost instantly. His clients are also a lot happier with the system:

"It isn’t complicated, it’s straightforward and easy to use. I get a lot of positive feedback from my clients. The timescales and ease of taking money has improved, thanks to Pomelo Pay.”

epc payment links invoice requirements
Read the full story: How this Business Owner Uses Pomelo Pay to Get Paid Instantly

Invoice requirements FAQ

What details do you need for an invoice?

  1. A unique identification number (like an invoice number)
  2. Your company name, address and contact information
  3. The company name and address of the customer you’re invoicing
  4. A clear description of what you’re charging for
  5. The date the goods or service were provided (supply date)
  6. The date of the invoice
  7. The amount(s) being charged
  8. VAT amount if applicable
  9. The total amount owed

Is it a legal requirement to provide an invoice?

As a business it is a legal obligation to invoice a customer once you’ve sold your product or service. If you are seller operating in the UK, you must provide an invoice.

What is a VAT invoice?

A VAT invoice is a specific type of invoice which is issued when a sale of a product or service is subject to a sales tax and you are registered for VAT. You should be registered for VAT if your turnover is higher than £85,000.

Read our article on how to pay VAT.

What needs to be on a VAT invoice?

You need to add all the same details as a normal invoice, as well as your VAT registration number and the 20% additional charge for VAT.

What is the difference between an invoice and a VAT invoice?

The main difference between the two is that one invoice is a standard demand that must be issued once a product/service has been delivered, and the other one is used to charge VAT on sales. With a VAT invoice, you can then reclaim that amount later on.