UK Invoicing Software for Freelancers and Small Businesses

Invoicing in the United Kingdom

The United Kingdom has a well-defined set of rules governing how businesses must invoice their customers. Whether you are a sole trader, a limited company, or a contractor working through a personal service company, the core requirement is the same: your invoices must contain specific information, be kept as digital records, and in many cases display the correct VAT treatment.

HMRC sets out the minimum content required on a business invoice. Even if you are not VAT-registered, your invoices must include your name (or trading name), your address, the date of the invoice, a description of goods or services, and the amount due. For VAT-registered businesses, additional fields are required, including your VAT registration number, the VAT rate applied to each line, and a sequential invoice number.

Tidybill handles all of this out of the box. You can store your company details once and they appear on every invoice. VAT rates can be set at line-item level, so a single invoice can contain a mix of standard-rated (20%), reduced-rated (5%), and zero-rated items. The invoice number sequence increments automatically, and you can customise the prefix to match your own numbering scheme.

VAT registration and Making Tax Digital

If your taxable turnover exceeds the current VAT registration threshold (£90,000 for the 2024-25 tax year), you are legally required to register for VAT with HMRC and charge VAT on your taxable supplies. Once registered, you must also comply with Making Tax Digital for VAT, which requires you to keep digital records of your VAT transactions and submit your VAT return using compatible software.

Tidybill keeps a digital record of all your invoices, including the VAT charged on each one. This makes it straightforward to calculate your VAT liability for each period. For direct MTD submission to HMRC, Tidybill exports your VAT figures in a format that can be uploaded via bridging software, and full direct submission is on the product roadmap.

Late payment rules for UK businesses

The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses a statutory right to charge interest on overdue invoices issued to other businesses. The statutory rate is 8% per year above the Bank of England base rate. You also have the right to claim a fixed sum as compensation for the cost of recovering the debt: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999, and £100 for debts of £10,000 or more.

Tidybill lets you configure a late fee or interest rate on your account so that overdue invoices automatically display the amount of interest accrued. Automated payment reminder emails can be set up to send before and after the due date, which significantly reduces the number of invoices that go overdue in the first place.

Sole traders and limited companies

The invoicing requirements differ slightly depending on your business structure. Sole traders must include their full legal name (or their trading name plus their legal name) and a contact address. Limited companies have additional obligations: the invoice must show the full registered company name, the registered office address, the company registration number from Companies House, and the VAT number if the company is VAT-registered. Tidybill accommodates all of these fields in the company settings screen.