Question 1

What must a UK VAT invoice include?

Accepted Answer

A UK VAT invoice must include: (1) A unique sequential invoice number; (2) Date of issue; (3) Tax point (the date VAT becomes due — usually the date of supply or payment, whichever comes first); (4) Your business name and address; (5) Your VAT registration number; (6) Client's name and address; (7) Description of goods or services; (8) Quantity and unit price; (9) VAT rate applied to each item; (10) Total amount exclusive of VAT; (11) VAT amount; (12) Total amount inclusive of VAT. For invoices under £250 (simplified invoices), you can omit the client's details and show a VAT-inclusive unit price instead. Failure to issue correct VAT invoices can result in HMRC penalties.

Question 2

What are standard payment terms for freelancers?

Accepted Answer

Common payment terms for freelancers and small businesses: Net 14 (payment within 14 days) — tight, suitable for small jobs or established clients; Net 30 (payment within 30 days) — the most common standard; Net 60 — common with larger corporate clients, but creates cash flow challenges for small businesses; Due on receipt — payment expected immediately on receiving the invoice; 50/50 split — 50% upfront deposit, 50% on completion — protects against non-payment. Best practices: state the exact due date on the invoice (e.g. 'due by 31 July 2026'), not just terms ('Net 30'); include late payment interest terms (UK statutory rate is Bank of England base rate + 8% for B2B); send the invoice promptly — every day of delay is a day longer you wait.

Question 3

How should I number my invoices?

Accepted Answer

Invoice numbering must be sequential and unique — you cannot reuse or skip numbers (HMRC and most tax authorities require this). Common formats: simple sequential (INV-001, INV-002...); year-prefixed (INV-2026-001 — useful for year-over-year tracking); client-prefixed (ACME-001 — when you have few clients and want to track per client); date-prefixed (20260701-001). Never re-number, delete or alter issued invoices. If you need to correct an invoice, issue a credit note against the original invoice number and then issue a new corrected invoice with a new number. This creates a clear audit trail for tax purposes.

Question 4

How long should I keep invoice records?

Accepted Answer

Record retention requirements vary by country: UK: HMRC requires businesses to keep VAT records for 6 years from the date of the last entry; self-assessment records for 5 years after the January 31 filing deadline. EU: generally 10 years (varies by country). USA: IRS recommends keeping business records for 3–7 years depending on the type (3 years for simple returns, 7 years if claiming losses from worthless securities). Spain: 4 years minimum for tax purposes, 6 years for VAT records. Best practice: keep digital and/or paper copies of all invoices for at least 7 years regardless of jurisdiction.

Invoice Generator

Everything included in every invoice

Invoice number & date

Due date & payment terms

Itemised line items

VAT / Tax

Notes & bank details

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