UK VAT Invoice Requirements

Why VAT invoices matter

A VAT invoice is not just a request for payment. It is the legal document that entitles your VAT-registered customer to reclaim the VAT you have charged them from HMRC. If your invoice is missing mandatory information, your customer cannot reclaim that input tax, and HMRC may reject their claim. Getting the format right is therefore important for both parties.

HMRC sets out the required content in VAT Notice 700: The VAT Guide. Businesses that issue non-compliant VAT invoices can face penalties, and customers who reclaim VAT on non-compliant invoices may be required to repay it.

Who must issue VAT invoices

If you are VAT-registered and you make a taxable supply to another VAT-registered business, you are required to issue a VAT invoice. You must do so within 30 days of the date of supply (the tax point). There is no legal obligation to issue a VAT invoice to a non-VAT-registered customer, but you must still account for the VAT and keep records of the supply. If a non-VAT-registered customer requests a VAT invoice, you should issue one.

Businesses that are not VAT-registered must not charge VAT on their invoices and must not issue documents that look like VAT invoices.

Mandatory fields on a full VAT invoice

A full VAT invoice is required for supplies over £250 (including VAT) and in all other cases unless the simplified invoice rules apply. The following information must appear on every full VAT invoice:

• A unique, sequential invoice number
• The date of issue
• The tax point (time of supply) if different from the invoice date
• Your full business name and address
• Your VAT registration number in the format GB followed by 9 digits
• The customer's full name or trading name, and address
• A description of the goods or services supplied
• The quantity and unit price of goods, or the extent and unit price of services
• The rate of any cash discount offered
• The total amount excluding VAT for each VAT rate
• The rate of VAT charged on each line
• The total VAT amount charged in sterling
• The total amount payable including VAT

UK VAT rates explained

There are three positive VAT rates in the United Kingdom, plus an exempt category for certain supplies on which no VAT is due and which cannot be recovered.

Standard rate: 20%

The standard rate applies to the majority of goods and services in the UK. This includes professional services such as consultancy, design, software development, marketing, and most business-to-business services. When in doubt, the standard rate applies unless a specific reduced or zero rate is listed in law.

Reduced rate: 5%

The reduced rate applies to a limited list of goods and services, including domestic fuel and power, children's car seats, certain energy-saving materials, and some aspects of residential conversions and renovations. Most freelancers and service-based small businesses will never charge the reduced rate.

Zero rate: 0%

Zero-rated supplies are taxable at 0%. This means VAT is charged but at a nil rate. Common examples include most food (with exceptions for catering and certain processed foods), children's clothing and footwear, books and publications, public transport, and new residential construction. Although the rate is zero, you must still show it on a VAT invoice and include it in your VAT return. Crucially, being zero-rated means you can still reclaim input VAT on your purchases.

Exempt supplies

Certain supplies are exempt from VAT entirely, including financial services, insurance, education, health services, and commercial letting of property in some circumstances. If you make only exempt supplies, you cannot register for VAT and cannot reclaim input tax. If you make a mix of taxable and exempt supplies, partial exemption rules apply.

Simplified VAT invoices

For supplies under £250 including VAT, you can issue a simplified VAT invoice. This does not need to show the customer's name and address, nor separate net and gross amounts. A simplified invoice must still show your business name, address, VAT number, date, description of the supply, the total amount payable including VAT, and the VAT rate applied. A till receipt from a VAT-registered retailer is a common example of a simplified VAT invoice.

The tax point

The tax point (time of supply) determines which VAT accounting period a transaction falls into. The basic tax point is the date goods are removed or services are performed. However, an earlier date can become the actual tax point if either you issue a VAT invoice or you receive payment before the basic tax point occurs. A later date can be used if you issue a VAT invoice within 14 days after the basic tax point, which is why it is common practice to invoice promptly at or just after delivery of services.

Record keeping and digital records

All VAT-registered businesses must keep VAT records for at least six years. Under Making Tax Digital for VAT, these records must be kept in a digital form. This means using software that stores the details of each supply, rather than relying on paper records alone. Tidybill keeps a permanent digital record of every invoice you issue, including all VAT amounts, which supports your MTD obligations.

How Tidybill handles UK VAT invoices

Tidybill lets you enter your VAT registration number in company settings, and it will appear on every invoice you generate. You can apply a VAT rate (20%, 5%, 0%, or custom) to each line item individually, so a single invoice can contain a mix of standard-rated and zero-rated lines. The invoice PDF calculates and displays the net total, VAT amount, and gross total in the correct format. Invoice numbers are automatically assigned in a sequential series, with a customisable prefix.

For more on UK invoicing rules by business type, see our guides on sole trader invoicing and limited company invoicing.