UK VAT invoice requirements

A VAT invoice is the evidence your business customers need to reclaim the VAT you charge them, so HMRC is precise about what it must show. The rules below come from HMRC's VAT guide (VAT Notice 700, sections 16 and 17) and its record-keeping notice (VAT Notice 700/21). They apply once you're VAT-registered, which is compulsory when your taxable turnover for the last 12 months goes over £90,000, or you expect it to in the next 30 days.

When you must issue a VAT invoice

You must give a VAT invoice whenever you supply standard-rated or reduced-rated goods or services to another VAT-registered business. You don't need to issue one:

• to customers who aren't VAT-registered (you don't have to check, and many businesses issue one to anyone who asks)
• when the invoice only covers zero-rated or exempt sales within the UK
• when your customer operates a self-billing arrangement
• for a gift of goods on which VAT is due

Never issue a VAT invoice for goods sold under a second-hand margin scheme, which has its own invoicing rules.

The 30-day rule. Issue the VAT invoice within 30 days of the tax point. You can go beyond 30 days without asking in a few cases, such as when you're waiting for invoices from your own suppliers or sub-contractors; otherwise you need to apply to HMRC in writing.

You can write invoices in another language, but if an HMRC officer asks for an English translation of a specific invoice, you must provide it within 30 days.

What a full VAT invoice must show

HMRC lists these details in paragraph 16.3 of VAT Notice 700:

• a sequential number, based on one or more series, that uniquely identifies the invoice
• the time of supply (tax point)
• the date of issue, if it's different from the tax point
• your name, address and VAT registration number (you can trade under another name, but the name and address you're registered under must appear somewhere on the invoice)
• your customer's name and address
• a description that identifies the goods or services
• for each description, the quantity of goods or extent of services, the VAT rate and the amount excluding VAT
• the unit price, where goods or services are countable, such as an hourly rate
• the total excluding VAT
• the rate of any cash discount offered
• the total VAT, in sterling

Line amounts and the total excluding VAT can be in any currency. For a numbering system that meets the sequential rule, see invoice numbering. You can build a VAT invoice in the UK VAT invoice generator. Businesses in Northern Ireland supplying goods to EU customers must show some extra details.

Simplified and modified invoices

If a supply is £250 or less including VAT and your customer agrees, you can issue a simplified VAT invoice. It must show:

• your name, address and VAT registration number
• the time of supply
• a description of the goods or services
• for each VAT rate, the total including VAT and the rate

Exempt supplies can't go on a simplified invoice. For a supply over £250, HMRC says you must issue either a full VAT invoice or a modified VAT invoice, which shows VAT-inclusive values instead of VAT-exclusive ones. Retailers must also issue a full VAT invoice when a customer asks for one, even for £250 or less.

The tax point (time of supply)

The tax point decides which VAT return a sale belongs in. You owe the VAT for that period whether or not your customer has paid, unless you use the Cash Accounting Scheme.

• Basic tax point: for goods, usually the date you send them or the customer takes them away. For services, the date the service is performed, which is normally when all the work except invoicing is finished.
• Earlier invoice or payment: if you issue a VAT invoice or receive a payment before the basic tax point, that earlier date is the tax point for the amount invoiced or received.
• The 14-day rule: if you issue the VAT invoice within 14 days after the basic tax point, the invoice date becomes the tax point. HMRC can agree a longer period, which helps if you invoice monthly.

For example, you finish a job on 3 March. Invoice it on 10 March and the tax point is 10 March. Invoice it on 25 March and the tax point stays 3 March, and the 30-day rule still means the invoice must go out by 2 April.

Invoicing in a foreign currency

You can price and total an invoice in any currency, but the total VAT must be shown in sterling. HMRC accepts three ways to convert it (VAT Notice 700, paragraph 7.6):

1. the UK market selling rate at the time of supply
2. HMRC's period rate of exchange, which you can adopt without telling HMRC but can't then drop without its agreement
3. another rate or method you use commercially, if HMRC approves it in writing

For example, on an invoice for €11,500 plus 20% VAT of €2,300, a rate of €1.15 to the pound means the invoice must show VAT of £2,000.00.

Zero-rated and exempt items

If a VAT invoice includes zero-rated or exempt items, it must show clearly that no VAT is payable on them, and give a separate total for their value. Zero-rated items are still taxable at 0%, so show that rate; exempt items carry no VAT at all. You can also put zero-rated or exempt sales on separate invoices, which some businesses find simpler for their records.

Reverse charge

Construction services

Since 1 March 2021, most building and construction services supplied between VAT-registered businesses and reported under the Construction Industry Scheme (CIS) fall under the domestic reverse charge. The customer accounts for the VAT to HMRC instead of paying it to you. It doesn't apply to supplies to private householders, or to end users and intermediary suppliers who tell you in writing that they are one.

Your invoice needs all the usual VAT invoice details plus a clear note that the reverse charge applies, such as "Reverse charge: Customer to pay the VAT to HMRC". State the amount of VAT the customer must account for, but leave it out of the total VAT charged. On a £4,000 sub-contract at 20%, you'd show £800 of reverse charge VAT and ask for £4,000.

Services across borders

For most business-to-business services, the place of supply is where the customer belongs. If you buy such services from a supplier outside the UK, you account for the VAT yourself under the reverse charge. If you supply them to a business customer outside the UK, they're generally outside the scope of UK VAT, so you don't charge UK VAT. VAT Notice 741A covers the exceptions.

Pro forma invoices and e-invoices

A pro forma invoice offers goods or services before you supply them. Your customer can't use it to reclaim VAT, even if it shows every VAT invoice detail, and HMRC says it should be clearly marked "This is not a VAT invoice". Once you supply the goods or services, or receive payment, issue a proper VAT invoice. The pro forma invoice generator handles the first step.

Electronic invoices, including a PDF sent by email, are acceptable as long as they include everything a paper VAT invoice needs and their origin, integrity and legibility can be ensured. This is set to change: the government will make e-invoicing mandatory for all VAT invoices from April 2029, meaning structured data exchanged between accounting systems rather than PDFs. HMRC and the Department for Business and Trade are preparing a roadmap setting out the standards and milestones.

Worked example

A wholesaler invoices a VAT-registered children's shop for goods at three different rates:

Because the invoice includes a zero-rated line, it also needs a separate total for zero-rated items: £90.00. To find the VAT inside a VAT-inclusive price, use the VAT fraction: one-sixth at 20% (£432.00 ÷ 6 = £72.00) and one twenty-first at 5% (£299.25 ÷ 21 = £14.25). The VAT calculator works this out for any amount. HMRC also lets you round the total VAT on an invoice down to a whole penny.

Records and Making Tax Digital

Keep a copy of every VAT invoice you issue, and keep your business records for VAT for at least 6 years. Under Making Tax Digital, all VAT-registered businesses must keep their VAT records digitally and file VAT Returns through compatible software, or bridging software if your records are in spreadsheets.

For edge cases, such as margin schemes, goods moving between Northern Ireland and the EU, or long-running contracts, check the relevant HMRC notice or ask an accountant.