How to Create a VAT Invoice in the UK (with Template and Checklist)

To create a VAT invoice in the UK, you must be VAT-registered and include a unique sequential invoice number, your business name, address and VAT registration number, the invoice date and time of supply, the customer's name and address, a description of what you supplied with quantity and unit price, the VAT rate for each item, and the totals excluding VAT, the total VAT and the total including VAT. You normally have to issue it within 30 days of the supply or of the payment, and keep a copy for at least 6 years.

Below you will find what each field means, when you can use a simplified invoice instead, a template layout you can copy, and a checklist to run before you hit send. The rules come from HMRC guidance on VAT invoices; always check the current version on GOV.UK if your situation is unusual.

Who has to issue VAT invoices in the UK

Only VAT-registered businesses can issue VAT invoices and charge VAT. You must register for VAT once your VAT-taxable turnover goes over the registration threshold (£90,000 over a rolling 12-month period since April 2024), and you can register voluntarily below it.

If you are VAT-registered, you must normally issue a VAT invoice when you sell standard-rated or reduced-rated goods or services to another VAT-registered business. For sales to consumers you are not required to issue a VAT invoice unless the customer asks for one, although most businesses still give a receipt or invoice.

If you are not VAT-registered, you still invoice your clients, but you must not show or charge VAT on the invoice.

What a full UK VAT invoice must include

A full VAT invoice must show:

1. A unique invoice number that follows on from the previous invoice. You can use more than one sequence, for example per branch, as long as each number is unique.
2. Your business name and address.
3. Your VAT registration number.
4. The invoice date.
5. The time of supply (tax point) if it is different from the invoice date.
6. The customer's name or trading name, and address.
7. A description that identifies the goods or services supplied.
8. For each item: the quantity, the unit price excluding VAT, any discount, and the VAT rate charged. If an item is zero-rated or exempt, make it clear that no VAT is charged on it.
9. The total amount excluding VAT.
10. The total amount of VAT.
11. The total amount including VAT.

If you invoice in a foreign currency, HMRC expects the VAT amount to be shown in pounds sterling as well, using an acceptable exchange rate.

Current UK VAT rates

Exempt supplies, such as most insurance and some financial services, are not the same as zero-rated ones. Mark them clearly on the invoice.

Simplified and modified VAT invoices

Retailers have two lighter options:

• Simplified VAT invoice for retail sales of £250 or less including VAT. It needs a unique invoice number, your business name and address, your VAT number, the time of supply, a description of the goods or services, the total including VAT and the VAT rate for each item. Your customer can still ask for a full VAT invoice.
• Modified VAT invoice for retail sales over £250, if the customer agrees. It shows the VAT-inclusive price of each item, together with the full set of totals.

Business-to-business sales should normally use a full VAT invoice.

Special cases you should know about

Proforma invoices

A proforma invoice is a request for payment before the supply, not a VAT invoice. Mark it clearly with the words "This is not a VAT invoice", and issue the real VAT invoice once the supply is made or payment is received. In good invoicing software, you convert the proforma into a VAT invoice with one click.

Reverse charge

Some supplies, such as certain building and construction services under the domestic reverse charge, require the customer to account for the VAT instead of you. In that case the invoice must say that the reverse charge applies and that the customer has to account for the VAT to HMRC, and you do not add the VAT to the amount payable.

Credit notes

If you need to correct a VAT invoice or give a refund, issue a credit note that refers to the original invoice rather than deleting or editing the original document.

Customers in the EU

Since Brexit, sales to EU businesses follow different rules depending on whether you sell goods or services. If you work with EU clients, our guide to EU VAT invoice requirements explains what EU buyers expect to see.

UK VAT invoice template: the layout

You can copy this structure into any template or check it against the invoice your software produces:

If you prefer to start from a file, our free Word invoice template and Google Docs invoice template give you a ready layout. Remember that with a template you have to keep numbering and VAT totals right yourself.

How to create a VAT invoice step by step

1. Set up your business details once: name, address, VAT number and logo.
2. Add the customer: their name or trading name and address, and their VAT number for business customers.
3. Add the line items: description, quantity, unit price excluding VAT and the correct VAT rate for each line.
4. Check the dates: invoice date, time of supply and due date.
5. Check the totals: net total, VAT per rate and gross total.
6. Send it by email as a PDF or a link, ideally with an online payment option.
7. Store a copy and record when it is paid.

In InvoiceOcean you enter your company details and VAT number once, pick the customer and products from your lists and set the VAT rate on each line, and the net amount, VAT and total are calculated automatically. Every invoice gets the next number in the sequence. See InvoiceOcean for UK small businesses and the pricing in pounds.

Record keeping and Making Tax Digital

You must keep copies of all VAT invoices you issue and receive, normally for at least 6 years. They can be stored digitally.

Under Making Tax Digital for VAT, VAT-registered businesses have to keep digital records and submit VAT returns using compatible software. Online invoicing keeps your sales invoices as digital records from the start, which makes it easier for you or your accountant to prepare the VAT return in your MTD-compatible software.

UK VAT invoice checklist

• Unique, sequential invoice number
• Your business name and address
• Your VAT registration number
• Invoice date, and time of supply if different
• Customer name or trading name and address
• Clear description of each item
• Quantity and unit price excluding VAT
• Discount per item, if any
• VAT rate per item, with zero-rated or exempt items marked
• Total excluding VAT, total VAT, total including VAT
• VAT shown in sterling if you invoice in another currency
• Reverse charge wording, if it applies
• Payment terms and how to pay
• Issued within 30 days of the supply or payment
• Copy stored for at least 6 years

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