In this guide (10)
- When do you have to issue a VAT invoice?
- What must a full VAT invoice show?
- What does a correct full invoice look like?
- When can you use a simplified invoice?
- What must a VAT credit note show?
- How quickly must you issue invoices, and how long must you keep them?
- What are the most common VAT invoice mistakes?
- How EasyTaskr helps
- Questions people ask
- Sources
Key takeaways
- Issue a VAT invoice when you sell standard- or reduced-rated goods to a VAT-registered customer, normally within 30 days.
- A simplified invoice is allowed for sales of £250 or less including VAT.
- The VAT total must be shown in sterling, even if you invoice in another currency.
- A valid credit note must point back to the original invoice and be issued within 14 days of a refund.
- Keep a copy of every VAT invoice you issue and receive for at least 6 years.
When do you have to issue a VAT invoice?
If you are VAT registered, you must issue a VAT invoice whenever you sell standard-rated or reduced-rated goods or services to another VAT-registered business. Normally you must issue it within 30 days of the date of the sale.
Your business customer needs it: the VAT invoice is their main evidence for reclaiming the VAT you charged. That is why HMRC is strict about the details.
You do not have to issue a VAT invoice when:
- you sell to members of the public as a retailer, unless the customer asks for one
- the invoice would only cover exempt or zero-rated sales within the UK
- your customer runs a self-billing arrangement
- you sell goods under a second-hand margin scheme
- you make a gift of goods on which VAT is due
Only VAT-registered businesses can issue VAT invoices. If you are not registered, do not show VAT or a VAT number on your invoices.
What must a full VAT invoice show?
A full VAT invoice must show eleven things. Use this as a checklist against your current invoice template.
| # | Detail | Example |
|---|---|---|
| 1 | A unique invoice number that follows a sequence | INV-002417 |
| 2 | The time of supply (tax point) | 14 October 2026 |
| 3 | The date of issue, if different from the time of supply | 16 October 2026 |
| 4 | Your business name and address | Your registered trading name and address |
| 5 | Your VAT registration number | GB 123 4567 89 (example format) |
| 6 | The customer's name and address | The buyer's business name and delivery or billing address |
| 7 | A description that identifies what you supplied | "Crisps, ready salted, 32 × 25 g case" |
| 8 | For each line: quantity, unit price, VAT rate, and amount excluding VAT | 10 cases × £18.00 = £180.00 at 20% |
| 9 | The total amount excluding VAT | £245.00 |
| 10 | The rate of any cash discount offered | 2% if paid within 7 days |
| 11 | The total VAT, in sterling | £36.00 |
Prices and the net total can be in any currency. The VAT total must always be in sterling.
What does a correct full invoice look like?
Here is a wholesaler's invoice to a VAT-registered corner shop, mixing a standard-rated and a zero-rated product:
| Description | Qty | Unit price | Net | VAT rate | VAT |
|---|---|---|---|---|---|
| Crisps, ready salted, 32 × 25 g case | 10 | £18.00 | £180.00 | 20% | £36.00 |
| Tinned chopped tomatoes, 12 × 400 g case | 5 | £13.00 | £65.00 | 0% | £0.00 |
| Total excluding VAT | £245.00 | ||||
| Total VAT | £36.00 | ||||
| Amount payable | £281.00 |
The rate goes on every line because the rules require it, and because it shows the shop exactly which product the £36.00 of VAT belongs to.
When can you use a simplified invoice?
You can issue a simplified VAT invoice when the sale is £250 or less including VAT. It needs less detail and is what most till receipts are.
| Detail | Full invoice | Simplified invoice (£250 or less incl. VAT) |
|---|---|---|
| Your name and address | Yes | Yes |
| Your VAT number | Yes | Yes |
| Time of supply | Yes | Yes |
| Description of goods or services | Yes | Yes |
| Customer's name and address | Yes | No |
| Unique sequential number | Yes | No |
| Quantity and unit price per line | Yes | No |
| Net amount and VAT amount | Yes | No |
| For each VAT rate: total including VAT and the rate | — | Yes |
Exempt sales must not be included on a simplified invoice.
Example. A café sells a business customer two hot coffees and two hot pasties to eat in for £14.40. The receipt shows the café's name, address and VAT number, the date and time, "2 × coffee, 2 × pasty", "Total £14.40 incl. VAT at 20%". That is a valid simplified invoice. The customer can work out the VAT as £14.40 ÷ 6 = £2.40.
Over £250? If a retail customer asks for an invoice on a sale over £250, you must give either a full VAT invoice or a modified VAT invoice, which shows VAT-inclusive values instead of VAT-exclusive ones.
What must a VAT credit note show?
A credit note reduces a sale you already invoiced, for returns, overcharges or an agreed discount. To be valid for VAT, it must reflect a genuine mistake, overcharge or agreed reduction, give the customer a real refund or credit, and be issued within 14 days of any refund payment.
It must show:
| Detail on a credit note |
|---|
| An identifying number and the date of issue |
| Your name, address and VAT registration number |
| The customer's name and address |
| A description of the goods or services being credited |
| The quantity and amount for each description |
| The total credited, excluding VAT |
| The rate and amount of VAT credited, in sterling |
| The number and date of the original VAT invoice |
Example. The shop above returns 2 damaged cases of crisps. The credit note references INV-002417, shows 2 × £18.00 = £36.00 net, VAT at 20% = £7.20, total credit £43.20. You reduce your output VAT by £7.20, and the shop reduces the VAT it reclaims by £7.20.
If you issue a credit note without adjusting VAT, write "This is not a credit note for VAT" on it.
How quickly must you issue invoices, and how long must you keep them?
Normally you must issue a VAT invoice within 30 days of the date of the sale, and keep a copy of every VAT invoice you issue. Keep the VAT invoices you receive too: they are your evidence for reclaiming VAT on purchases, so file them where you can find them quickly.
VAT records, including invoices and credit notes, must be kept for at least 6 years. Under Making Tax Digital, the key details of each sale and purchase must also be held in software.
Cash payments against an invoice. If a customer pays an invoice in cash and asks for a receipt, you must give one showing the amount and date it. Some customers need this because they account for VAT on a cash basis.
| Document | Issue within | Keep for |
|---|---|---|
| VAT invoice you issue | Normally 30 days of the sale | At least 6 years |
| Credit note after a refund | 14 days of the refund payment | At least 6 years |
| VAT invoice you receive | — | At least 6 years |
What are the most common VAT invoice mistakes?
Most problems come from missing details rather than wrong sums.
| Mistake | Why it matters | Fix |
|---|---|---|
| Taking 20% of a VAT-inclusive total | Overstates VAT: 20% of £120 is £24, but the VAT is £20 | Divide a 20% gross price by 6 |
| No VAT rate per line on mixed invoices | The customer cannot prove which VAT applies to which item | Show the rate on every line |
| Invoice numbers that skip or repeat | Breaks the unique sequence HMRC expects | Let your system number invoices |
| VAT number missing or wrong | The document is not a valid VAT invoice, so your customer lacks evidence to reclaim | Print it from your settings on every document |
| Charging VAT before your registration date | You collect VAT you are not entitled to charge | Start VAT on your effective date of registration |
| Credit note with no reference to the original invoice | You must then satisfy HMRC by other means that VAT was accounted for on the original sale | Always quote the original invoice number and date |
| Simplified invoice used for a sale over £250 | Not a valid VAT invoice | Issue a full or modified invoice |
For when to register and what rate applies to what, see the VAT guide for small businesses. For keeping these records digitally, see Making Tax Digital in the UK. You can check any VAT sum with the VAT calculator.
This guide is general information, not tax advice. Rules change, so check GOV.UK or ask an accountant.
Questions people ask
Do I have to give a VAT invoice to every customer?
No. You must issue one when you sell standard- or reduced-rated goods or services to another VAT-registered business. Retailers can assume no VAT invoice is needed for members of the public unless the customer asks.
Can a till receipt be a VAT invoice?
It can be a simplified VAT invoice if the sale is £250 or less including VAT and the receipt shows your name, address, VAT number, the time of supply, a description, and for each rate the total including VAT and the rate.
Can I invoice in euros or dollars?
Yes, the prices can be in any currency, but the total VAT must be shown in sterling.
Do I need a VAT invoice for zero-rated sales?
No. You do not have to issue a VAT invoice if it would cover only exempt or zero-rated sales within the UK.
Sources
- Record keeping (VAT Notice 700/21) — GOV.UK
- VAT guide (VAT Notice 700) — GOV.UK
- Invoices: what they must include — GOV.UK
- VAT rates on different goods and services — GOV.UK
Written by the EasyTaskr editorial team from the sources above. First published .
