How to Invoice Correctly in the UK: Legal Requirements and Tips

The Accounted Business Team·6 March 2026·7 min read

Getting paid starts with sending a proper invoice. But beyond the practical need to request payment, UK invoices must meet certain legal requirements depending on whether you are a sole trader, a limited company, or VAT registered. Get it wrong and you could face problems with HMRC, difficulties chasing late payments, or clients who dispute what they owe.

This guide covers everything you need to know about invoicing correctly in the UK, from what must appear on every invoice to your legal rights when payment is overdue.

What Must Be on Every Invoice

Regardless of your business structure, every invoice you issue should include the following basic information:

The word "Invoice" — it should be clearly identified as an invoice, not a quote or receipt.
A unique invoice number — sequential, with no gaps or duplicates.
Your name or business name and contact details.
The client's name or business name and address.
The date the invoice is issued.
A description of the goods or services provided — specific enough that the client knows exactly what they are being charged for.
The amount due — broken down by line item if there are multiple charges, with the total clearly shown.
Payment terms — when payment is due and how to pay.

These are the essentials. Beyond this, the requirements differ depending on your business type.

Sole Trader Invoice Requirements

If you are a sole trader, your invoices are relatively straightforward. You must include your name (or your trading name if you use one) and, if you use a trading name, your actual name as well. This is a requirement under the Business Names Act. So if your business is called "Bright Design Studio" but your name is Sarah Jones, both must appear on the invoice.

You do not need to include your UTR (Unique Taxpayer Reference) number on invoices. That is private information used only for your tax return.

If you are not VAT registered, do not include VAT on your invoices. You should not show a VAT number or VAT amount, as this could mislead your clients into thinking they can reclaim VAT on your charges.

Limited Company Invoice Requirements

If you trade through a limited company, you must include:

Your company's registered name (exactly as it appears at Companies House).
Your company registration number.
Your registered office address (this can be different from your trading address).
The place of registration (England and Wales, Scotland, or Northern Ireland).

These requirements come from the Companies Act 2006. Failing to include them is technically an offence, though in practice HMRC and Companies House tend to issue warnings before penalties.

VAT Invoice Requirements

If you are VAT registered, your invoices must meet additional HMRC requirements. There are two types of VAT invoice: full and simplified.

Full VAT Invoice

Required for supplies over £250. It must include everything listed above plus:

Your VAT registration number.
The tax point (date of supply) — this is usually the invoice date, but it can be the date of delivery or the date of payment, depending on circumstances.
The net amount (excluding VAT) for each line item.
The VAT rate applied to each item.
The total VAT amount.
The gross total (including VAT).
If the reverse charge applies, a note stating "Reverse charge: customer to account for VAT to HMRC."

Simplified VAT Invoice

If the total including VAT is £250 or less, you can issue a simplified VAT invoice. This only needs to show your name and address, your VAT number, the date, a description of the goods or services, the total amount including VAT, and the VAT rate.

VAT on Invoices for Different Rates

If your invoice includes items at different VAT rates (for example, standard-rated and zero-rated goods), you must show each rate separately with the net amount and VAT for each.

Invoice Numbering

Your invoice numbers must be sequential and unique. HMRC requires this so that there is a clear, auditable trail. You can use any format you like — simple numbers (001, 002, 003), prefixed numbers (INV-001), or date-based numbers (2026-001) — as long as the sequence is consistent and has no gaps.

If you issue a credit note, it should have its own sequential numbering system (for example, CN-001, CN-002) and reference the original invoice number.

Gaps in your invoice numbering can raise red flags during an HMRC enquiry, as they may suggest missing income. If you void an invoice, keep a record of why.

Payment Terms

Setting Your Terms

You are free to set whatever payment terms you choose. Common terms in the UK include:

Due on receipt — payment is expected immediately.
Net 14 — payment due within 14 days.
Net 30 — payment due within 30 days.
Net 60 — payment due within 60 days (more common for larger companies).

If you do not specify payment terms, the default under the Late Payment of Commercial Debts (Interest) Act 1998 is 30 days from the date of the invoice or the delivery of goods/services, whichever is later.

State your payment terms clearly on every invoice. Include the due date explicitly rather than just writing "Net 30" — not every client will calculate the date themselves.

Accepted Payment Methods

List the payment methods you accept and include the relevant details. For bank transfers, include your account name, sort code, and account number. For online payments, include a link.

Late Payment: Your Legal Rights

Statutory Interest

If a client pays late, you have the legal right to charge statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998. The rate is 8% plus the Bank of England base rate. As of early 2026, with the base rate at 4.5%, that gives you a statutory interest rate of 12.5% per annum.

Compensation for Debt Recovery

On top of interest, you can claim a fixed compensation amount:

| Debt amount | Compensation | |-------------|-------------| | Up to £999.99 | £40 | | £1,000 to £9,999.99 | £70 | | £10,000 or more | £100 |

How to Claim

You can add the interest and compensation to a new invoice or send a separate letter. In practice, many businesses use the threat of statutory interest as leverage to encourage prompt payment rather than actually charging it.

Electronic Invoicing

There is no legal requirement in the UK to send paper invoices. Electronic invoices — whether PDFs sent by email or invoices generated through accounting software — are perfectly valid, provided they contain all the required information.

HMRC accepts electronic records, and under Making Tax Digital, digital record-keeping is increasingly becoming the standard rather than the exception.

Common Invoicing Mistakes

Not Including Your Name on a Trading Name Invoice

If you trade under a name that is not your own legal name, you must include both. It is a legal requirement, not optional.

Charging VAT When You Are Not Registered

If you are not VAT registered and you add VAT to your invoices, you are committing an offence. Clients may also attempt to reclaim VAT on your invoice, which will create problems.

Vague Descriptions

"Services rendered" is not a good description. Be specific — "Website design: homepage and three subpages, delivered 15 February 2026" leaves no room for dispute.

Inconsistent Numbering

Skipping invoice numbers, reusing numbers, or using random numbers can cause problems during an HMRC enquiry and makes your bookkeeping harder to manage.

Forgetting to Chase

An invoice is a request for payment, not a guarantee. Follow up promptly when payment is overdue. A polite reminder on the day after the due date, followed by a firmer chasing email a week later, is standard practice.

How Accounted Simplifies Invoicing

Accounted lets you create professional invoices that meet all UK legal requirements, whether you are a sole trader, limited company, or VAT registered. Penny, the AI bookkeeper, automatically matches incoming payments to outstanding invoices, so your records stay up to date without manual effort. You can see at a glance which invoices are paid, which are overdue, and how much is outstanding.

Start your free trial of Accounted today and send your first invoice in minutes — correctly formatted, legally compliant, and automatically tracked.

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