What must a UK invoice include?

A valid UK invoice must include: your business name and address, customer name and address, a unique invoice number, the invoice date, a description of goods/services, quantity and unit price, total amount due, payment terms, and your payment details. VAT-registered businesses must also include their VAT number, VAT rate, and VAT amount.

How long should I give clients to pay an invoice?

Standard payment terms are 30 days, but you can set whatever terms you agree with your client. Common options are 7, 14, or 30 days. For new clients or large projects, consider asking for partial payment upfront (e.g., 50% deposit). The Late Payment of Commercial Debts Act allows you to charge statutory interest on overdue invoices.

Can I charge interest on late invoices?

Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest of 8% plus the Bank of England base rate on overdue business-to-business invoices. You can also claim a fixed compensation fee: £40 for debts under £1,000, £70 for debts £1,000-£9,999, and £100 for debts of £10,000 or more.

Invoicing Guide for the Self-Employed UK

Getting paid correctly and on time is essential for any self-employed person. A professional invoicing process looks credible, ensures legal compliance, and helps you maintain healthy cash flow.

What to Include on an Invoice

Required Elements

Element	Detail
Your business name	Trading name or company name
Your address	Business or registered address
Customer name and address	Who you are invoicing
Unique invoice number	Sequential (e.g., INV-001, INV-002)
Invoice date	Date the invoice is issued
Description of goods/services	Clear description of what was delivered
Quantity and rate	Hourly/daily rate × hours/days, or project fee
Total amount due	Before and after VAT (if applicable)
Payment terms	When payment is due (e.g. “Net 30”)
Payment details	Bank account number, sort code, or payment link
Your UTR or company number	UTR (sole trader) or Companies House number (Ltd)

Additional for VAT-Registered Businesses

Element	Detail
VAT registration number	Your VAT number
VAT rate	Rate applied (standard 20%, reduced, zero)
Net amount	Total before VAT
VAT amount	VAT charged
Gross amount	Total including VAT

Invoice Example Layout

Field	Example
From	Jane Smith Consulting, 10 High Street, Bristol, BS1 1AA
To	Acme Ltd, 20 London Road, London, EC1A 1AA
Invoice number	INV-2025-042
Date	15 October 2025
Due date	14 November 2025
Description	Website development — Phase 2 (40 hours @ £50/hr)
Subtotal	£2,000.00
VAT (20%)	£400.00
Total	£2,400.00
Payment	Sort code: 12-34-56, Account: 12345678

Payment Terms

Term	Meaning	Best For
Due on receipt	Payment expected immediately	Small, urgent invoices
Net 7	Due within 7 days	Quick turnaround work
Net 14	Due within 14 days	Standard for smaller businesses
Net 30	Due within 30 days	Most common; professional standard
Net 60	Due within 60 days	Larger corporate clients (try to avoid)

Deposit and Milestone Payments

Approach	When to Use
50% deposit, 50% on completion	Projects for new clients
30/30/40 split	Larger projects with milestones
Monthly invoicing	Retainer or ongoing work
100% upfront	Small, fixed-price jobs (if client agrees)

Chasing Late Payments

Stage	When	Action
1	1 day overdue	Friendly reminder email
2	7 days overdue	Follow-up email or phone call
3	14 days overdue	Formal letter referencing payment terms
4	30 days overdue	Final notice with late interest warning
5	60+ days overdue	Consider statutory interest, mediation, or Small Claims Court

Statutory Late Payment Interest

Component	Amount
Interest rate	Bank of England base rate + 8%
Compensation (debt under £1,000)	£40 fixed fee
Compensation (debt £1,000–£9,999)	£70 fixed fee
Compensation (debt £10,000+)	£100 fixed fee

Invoicing Software

Software	Monthly Cost	Best For
FreeAgent	£9.50–£24/month	Freelancers and small businesses
Xero	£15–£47/month	Growing businesses
QuickBooks	£12–£35/month	Sole traders
Wave	Free	Budget-conscious sole traders
Crunch	Free–£30/month	Contractors
Invoice Ninja	Free–£10/month	Invoicing-focused

See our accounting software guide for detailed comparisons.

Record-Keeping Requirements

Requirement	Detail
Keep copies of all invoices	Sent and received
Record all income and expenses	Accurately and promptly
Retain records for	5 years after 31 January submission deadline
Making Tax Digital	Digital record keeping required (income over £50,000 from April 2026)

Common Invoicing Mistakes

Mistake	Impact	Solution
No invoice number	Messy records, HMRC issues	Use sequential numbering
Vague description	Client disputes, delayed payment	Be specific about deliverables
No payment terms	Client pays when they want	State clear terms
Not chasing	Unpaid invoices pile up	Follow up on day 1 overdue
Incorrect VAT	HMRC penalties	Double-check rates and calculations
Wrong client details	Rejected or delayed payment	Verify details before sending

Tips for Getting Paid on Time

Invoice immediately — as soon as work is delivered
Be specific — clear description of what was delivered
Make payment easy — include bank details, or offer card/PayPal
Set clear terms upfront — in your contract, before work starts
Request deposits — especially for new clients or large projects
Automate reminders — most invoicing software does this
Build relationships — good communication prevents payment issues

For more on managing self-employed finances, see our freelancing guide and sole trader guide.