Question 1

What is an HMRC-compliant invoice?

Accepted Answer

An HMRC-compliant invoice includes all mandatory fields required by UK tax law: a unique sequential invoice number, your business name and address, the customer's name and address, a description of the goods or services, the date of supply, the total amount excluding VAT, the VAT rate applied, the total VAT charged, and your VAT registration number if you are VAT registered. For supplies over £250, a full VAT invoice is required.

Question 2

Do I need a VAT number on my invoice?

Accepted Answer

You only need a VAT number on your invoice if you are VAT registered. If your taxable turnover exceeds £90,000 (the current threshold), you must register for VAT with HMRC and include your VAT registration number (format: GB followed by 9 digits) on all invoices. If you are not VAT registered, you must not charge or show VAT on your invoices.

Question 3

What is the difference between a simplified and full VAT invoice?

Accepted Answer

A simplified VAT invoice can be used for supplies totalling under £250 (including VAT). It requires fewer details — just your name, address, VAT number, date, description of goods/services, and the total amount including VAT. A full VAT invoice is required for amounts over £250 and must include the customer's name and address, a line-by-line breakdown of charges, the VAT rate for each item, and the total VAT separately stated.

Question 4

How long should I keep invoices for HMRC?

Accepted Answer

HMRC requires you to keep all invoices and financial records for at least 6 years. If you are VAT registered, you must keep VAT records for at least 6 years from the end of the VAT accounting period they relate to. For self-assessment, records must be kept for at least 5 years after the 31 January submission deadline. Using digital record-keeping is recommended and is required under Making Tax Digital.

Question 5

What VAT rates apply in the UK?

Accepted Answer

The UK has three VAT rates: Standard rate (20%) applies to most goods and services; Reduced rate (5%) applies to certain items like home energy, children's car seats, and sanitary products; Zero rate (0%) applies to most food, children's clothing, books, and public transport. Some supplies are exempt from VAT entirely, such as insurance, education, and health services. Our invoice generator lets you set the correct VAT rate for each line item.

Question 6

Can I invoice in a foreign currency?

Accepted Answer

Yes, UK businesses can issue invoices in foreign currencies. However, for VAT purposes, you must convert the VAT amount to sterling using either the HMRC exchange rate on the date of supply or the market exchange rate at the time of supply. You should note the exchange rate used and the sterling equivalent on the invoice. Our tool supports GBP, EUR, and USD.

Question 7

What is Making Tax Digital (MTD)?

Accepted Answer

Making Tax Digital is HMRC's initiative to digitise the UK tax system. VAT-registered businesses are already required to keep digital records and submit VAT returns using MTD-compatible software. From April 2026, MTD for Income Tax Self Assessment will apply to self-employed individuals and landlords with income over £50,000. This means digital record-keeping and quarterly updates to HMRC will be mandatory.

Question 8

How do I calculate VAT on an invoice?

Accepted Answer

To calculate VAT, multiply the net amount (before VAT) by the VAT rate. For standard rate: Net amount × 0.20 = VAT amount. For reduced rate: Net amount × 0.05 = VAT amount. The gross amount (what the customer pays) is the net amount plus VAT. If you have a VAT-inclusive price and need to find the VAT element, divide the gross amount by 6 for 20% VAT, or by 21 for 5% VAT. Our invoice generator calculates all of this automatically.

Question 9

Do I need to charge VAT if I am not VAT registered?

Accepted Answer

No. If you are not VAT registered, you must not charge VAT on your invoices. You should clearly state your prices without VAT and should not show a VAT number. You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to exceed this threshold in the next 30 days alone. You can also register voluntarily below this threshold.

Question 10

What is a proforma invoice?

Accepted Answer

A proforma invoice is a preliminary estimate of costs sent before goods are delivered or services are provided. It is not a legal demand for payment and cannot be used for VAT reclaim purposes. Proforma invoices are commonly used for customs declarations, advance payment requests, and providing quotes. Once the goods are delivered or services completed, a proper commercial invoice must be issued with a unique invoice number.

Free UK Invoice Generator

Your Business Name

INVOICE

Bill To

Manual Invoicing

HandOnWeb Automated

What Must a UK Invoice Include?

VAT Invoice Types Explained

How to Get Paid Faster

Send invoices immediately

Include clear payment terms

Add bank details on invoice

Follow up at 7 and 14 days

Offer multiple payment methods

Offer early payment discounts

Common Invoicing Mistakes to Avoid

Missing VAT number

Wrong date format

No payment terms

Missing unique number

Not keeping copies

Frequently Asked Questions

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