Blog
If you are VAT registered, your invoices need to meet specific legal requirements. Getting them wrong can cause problems with HMRC and with customers who cannot reclaim VAT.
UK VAT rules
A VAT invoice is different from a regular invoice because the customer needs it to reclaim VAT. If your VAT invoice is incomplete, their claim may be rejected and HMRC may investigate both of you.
Your business name and address. Customer name and address. Your VAT registration number. Invoice number (unique, sequential). Invoice date and tax point date (usually the date of supply). Description of goods or services. Net amount per rate. VAT rate applied and VAT amount. Gross total amount. For each different VAT rate used, show the net amount, VAT rate and VAT amount separately.
The standard rate is 20%. Reduced rate of 5% applies to some goods and services such as home energy and children's car seats. Zero rate (0%) applies to most food, books, transport and some health items. Exempt means no VAT is charged at all — do not confuse this with zero rate. Check HMRC guidance or ask an accountant if you are unsure which rate applies to your goods or services.
For retail supplies under £250 including VAT, you can issue a simplified invoice. For supplies where the customer cannot reclaim VAT, simplified invoices are also acceptable. These need fewer fields — but they still require your VAT number, the date, a description and the total including VAT. You cannot use a simplified invoice when a business customer needs full rate and amount details to reclaim VAT.
If your annual VATable turnover is below £90,000 you may not need to register for VAT. If you are below the threshold you do not charge VAT on your invoices. If you are registered, you must charge VAT from the date of registration onwards. If you supply exempt goods or services, you do not charge VAT — but you also cannot reclaim VAT on related purchases. Always check with HMRC or a VAT accountant if you are unsure about your registration status or applicable rates.
You must keep VAT invoices for at least 6 years — longer if the records relate to an ongoing HMRC investigation. Digital records are acceptable as long as they are readable and can be produced to HMRC on request. If you use accounting software, make sure your invoice templates meet VAT invoice requirements before you start issuing them.
You must issue a VAT invoice when you sell goods or services to another business and you are VAT registered. The invoice must be issued within 30 days of the supply date.
If you charge the wrong VAT rate or do not charge VAT when you should, HMRC may assess you for the difference. If you overcharge VAT and keep it, that is an offence. If you undercharge, you still owe the correct VAT to HMRC.
Simplified VAT invoices can be used for retail sales under £250 including VAT, or for supplies where the VAT cannot be deducted. They still need your business name, VAT number, date, description of goods or services and the total amount including VAT.
Yes, your VAT registration number must appear on every VAT invoice you issue. This applies to both standard and simplified invoices.