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.
Staff Writer ● Oct 11, 2016
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