Invoicing in the UK is governed by a mix of HMRC rules, VAT legislation, and basic contract law. Most of it is straightforward — but get the details wrong and you could end up with invoices that aren't legally valid, clients who can't reclaim VAT, or a paper trail that doesn't hold up if there's a dispute. Here's exactly what the law requires and what good practice looks like on top of that.
Is There a Legal Requirement to Invoice in the UK?
If you're VAT registered and making a taxable supply to another VAT-registered business, yes — you're legally required to issue a VAT invoice. Your client needs it to reclaim the VAT they've paid.
If you're not VAT registered, there's no strict legal requirement to issue a formal invoice for every transaction. But it's still strongly advisable — an invoice is your evidence of the transaction for tax and legal purposes, and most clients expect one.
What Every UK Invoice Should Include
Even for non-VAT-registered businesses, a professional UK invoice should contain:
Your full name or business name
Your address
Your client's name and address
A unique invoice number
The invoice date
A clear description of the goods or services provided
The amount charged for each item
The total amount due
Payment terms — due date and accepted methods
Additional Requirements If You're VAT Registered
Once you're VAT registered, your invoices must also include:
Your VAT registration number
The tax point (the date the supply was made, if different from the invoice date)
The VAT rate applied to each item
The VAT amount charged — shown as a separate line
The total amount excluding VAT
The total amount including VAT
If you supply goods or services at different VAT rates on the same invoice, you must show each rate and the corresponding VAT amount separately.
VAT Rates in the UK
There are three VAT rates currently in use:
Standard rate — 20%: Applies to most goods and services
Reduced rate — 5%: Applies to some goods and services including domestic energy, children's car seats, and certain home renovation work
Zero rate — 0%: Applies to most food, children's clothing, books, and some construction work
Some supplies are VAT exempt entirely — insurance, financial services, education, and some healthcare. Exempt supplies don't appear on a VAT return. If you're unsure which rate applies to your work, check HMRC's guidance or speak to an accountant.
The VAT Registration Threshold
You must register for VAT once your taxable turnover exceeds £90,000 in any rolling 12-month period. You can also register voluntarily below that threshold — which can be beneficial if your clients are VAT-registered businesses, as they can reclaim the VAT you charge.
Once registered, you must charge VAT on all taxable supplies, submit VAT returns (usually quarterly), and keep VAT records for at least 6 years.
Simplified VAT Invoices
For retail supplies under £250 (including VAT), you can issue a simplified VAT invoice — also called a less detailed VAT invoice. This only needs to include:
Your business name and address
Your VAT registration number
The tax point date
A description of the goods or services
The total amount payable including VAT
The VAT rate applied
Simplified invoices cannot be used for zero-rated supplies or when invoicing another VAT-registered business who needs to reclaim input tax.
Sole Traders: What Name to Use
If you trade under your own name — no separate business name — use your full personal name on invoices. If you trade under a business name, you can use that, but you must also include your own name somewhere on the invoice (this is a legal requirement under the Companies Act and related regulations for sole traders).
Limited companies must also include their registered company name, company registration number, and registered office address on all business documents including invoices.
How Long to Keep Invoice Records
HMRC requires you to keep business records — including all invoices sent and received — for a minimum of 6 years from the end of the accounting period they relate to. VAT records must be kept for 6 years. If you're a limited company, records must be kept for 6 years from the date they were made.
In practice, most accountants recommend keeping everything for 7 years to be safe.
Late Payment Legislation
UK law gives you the right to charge interest on late commercial payments under the Late Payment of Commercial Debts (Interest) Act 1998. The statutory rate is 8% above the Bank of England base rate. You can also claim a fixed compensation fee:
£40 for debts under £1,000
£70 for debts between £1,000 and £9,999
£100 for debts of £10,000 or more
You don't have to include this on your invoice — the right exists automatically for business-to-business transactions. But it's worth knowing about, and mentioning a late payment clause on your invoices makes clients more likely to pay on time.
Making Tax Digital
Making Tax Digital (MTD) requires VAT-registered businesses to keep digital records and submit VAT returns using compatible software. If you're VAT registered, you need to be using MTD-compatible invoicing or accounting software. Paper invoices and spreadsheet-based submissions are no longer compliant for VAT purposes.
Clervo handles the UK invoicing structure for you — correct fields, VAT calculations, and a digital record of every invoice you send.