UK VAT Invoicing Requirements, With Worked Examples

Two invoice types, one decision point: £250

HMRC recognises two forms of VAT invoice, and which one you must issue depends on the value of the supply. A full VAT invoice is required for any supply, unless the total (including VAT) is £250 or less, in which case you can choose to issue a simplified VAT invoice instead. Both are legally valid; the simplified version just carries less detail because HMRC judges the risk of a small transaction to be lower.

This is not the same £250 test as "VAT registered or not" — both invoice types only apply once you are VAT-registered and charging VAT in the first place. If you are not VAT-registered, neither format applies to you: you issue an ordinary invoice with no VAT shown at all.

Full VAT invoice: required fields

• A unique, sequential invoice number
• The date of issue, and the tax point if different
• Your business name and address
• Your VAT registration number
• The customer's name (or trading name) and address
• A description of the goods or services
• The quantity of goods, or extent of services, and the unit price
• The net amount for each VAT rate charged
• The VAT rate applied to each line
• The total VAT amount, in sterling
• The total amount payable including VAT

Simplified VAT invoice: required fields

For supplies of £250 or less including VAT, you can drop the customer's details and the net/VAT split, and issue a simplified invoice showing:

• Your business name and address
• Your VAT registration number
• The date of supply
• A description of the goods or services
• The total amount payable, including VAT
• The VAT rate charged (if more than one rate applies, the VAT-inclusive amount for each rate)

Your VAT number: the format matters

A standard UK VAT registration number is the prefix GB followed by 9 digits, for example GB123456789. It must appear on every full and simplified VAT invoice you issue. You will find it on your VAT registration certificate, or in your HMRC online business tax account. If you quote it incorrectly (a common data-entry slip is transposing digits), your customer may not be able to reclaim the input VAT, so it is worth double-checking it once when you set up your invoicing software rather than re-typing it on every invoice.

You must currently be VAT-registered to charge VAT at all. The registration threshold is £90,000 of taxable turnover in any rolling 12-month period; the deregistration threshold, if your turnover later falls, is £88,000. Below the registration threshold you can register voluntarily, which is common if most of your customers are themselves VAT-registered and can reclaim the VAT you charge them.

Reverse charge wording

The reverse charge shifts the responsibility for accounting for VAT from the supplier to the customer, most commonly on cross-border B2B services and, since 2019, on most UK construction industry supplies (the domestic reverse charge for building and construction services). When a reverse charge applies, your invoice must still show your VAT number and the net value of the supply, but you must not add UK VAT to the total — and you must state clearly that the reverse charge applies and that the customer must account for the VAT.

HMRC accepts wording such as:

• "Reverse charge: customer to account for the VAT to HMRC"
• For construction services specifically: "VAT Act 1994 Section 55A applies" or the shorter "S55A VATA 94 applies"

If your invoicing software cannot calculate and display what the reverse charge VAT amount would have been, HMRC allows a fallback statement making clear the customer must account for VAT at the applicable rate on the net value shown, provided the goods or services subject to the reverse charge are clearly identified. Because the exact rule differs by transaction type (construction services, cross-border digital services, and other specified reverse charge categories each have their own legislation), check which reverse charge applies to your specific supply on gov.uk before finalising the wording.

Digital record-keeping under MTD VAT

Every VAT invoice you issue also has to be captured as part of your Making Tax Digital for VAT records, which has applied to all VAT-registered businesses, regardless of turnover, since April 2022. In practice this means keeping a digital record of the date of supply, the net value, the VAT rate, and the VAT amount for every invoice, and submitting your VAT return using MTD-compatible software rather than typing the totals directly into HMRC's old online portal. Manual re-keying between systems breaks the "digital link" MTD requires; exporting from one system and importing into another (without hand-typing the numbers) is fine. See our full Making Tax Digital for VAT guide for the record-keeping detail, and the MTD for freelancers guide if you are also within scope for MTD for Income Tax.

How Tidybill handles this

Tidybill lets you store your VAT number once in company settings, so it appears correctly formatted on every invoice. Each line item can carry its own VAT rate (20%, 5%, 0%, or a custom rate), so an invoice can mix rates or mark specific lines as reverse charge. Tidybill always generates a full invoice with the net, VAT, and gross breakdown shown — there is no need to manually switch to a simplified layout, since a full invoice is always acceptable even for supplies under £250. Every invoice is stored permanently, giving you the digital record MTD VAT requires. Quick sanity-check a VAT figure any time with the UK VAT calculator, or check an invoice due date with the invoice due date calculator.