How to create a VAT invoice

Whether you are a freelancer, a sole-trader or a contractor in the UK, it’s essential to know how to create a valid VAT invoice. We share a few basic facts and tips to help you out.

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The basics

Value added Tax (VAT) is charged on sales made. As a standard VAT-registered business, you charge VAT on sales and can claim VAT on purchases made from other VAT-registered businesses.

VAT invoices are not the same as:

  • Pro-forma invoices
  • Invoices that include the phrase “this is not a tax invoice”
  • Statements
  • Delivery notes
  • Customer orders
  • Quotations

What must be included on a VAT invoice?

A VAT invoice must include the following to be recognised by HMRC:

  • A unique, sequential invoice number
  • Your name or trading name and address
  • Your VAT registration number
  • The invoice date
  • The time of supply, also referred to as “tax point”, if this is different from the date above
  • The customer’s name or trading name and address
  • A description of the goods or services supplied

In addition to this general information, you’ll need to show a breakdown for each different item or service listed on the invoice:

  • Unit price excluding VAT
  • Quantity of goods or the details of the service
  • Rate of VAT that applies to the item or service
  • Total amount payable, excluding VAT
  • Rate of any cash discount, if applicable
  • Total amount of VAT charged

When can you use a simplified VAT invoice?

If you need to invoice for goods or services for £250 or less, including VAT, you are able to supply a simplified invoice. This will need to show:

  • Your name and address
  • Your VAT registration number
  • The time of supply (tax point)
  • A description of the goods or services

There’s better news still – you don’t need to issue a VAT invoice if:

  • Your invoice only lists exempt or zero-ratedsales within the UK
  • You’re giving goods as a gift
  • You sell goods under aVAT second-hand margin scheme
  • Your customer operates a self-billing arrangement

Make sure you’re on the right side of HMRC. Our team of experienced accountants are able to guide you, so you can get down to business. Contact us on +44 (0) 808 141 1643 to get started.

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