Self-Employment Guides UK — Tax, Business Setup, and Running Your Own Business

How to Invoice Correctly as a Freelancer UK

What to include on a freelance invoice, legal requirements, VAT invoices, payment terms, and how to chase late payments. Free invoice checklist.

By PocketWise · · 4 min read

Self-employment tax and business information is based on current HMRC rules. This is not tax or accounting advice. Consider consulting a qualified accountant for your specific circumstances.

Start here: Freelancing Hub.

Getting your invoices right is essential for maintaining cash flow and staying on the right side of HMRC. This guide covers exactly what to include, how to handle VAT, what payment terms to set, and how to deal with clients who do not pay on time.

What to Include on an Invoice

Mandatory Elements

Element Example
The word “Invoice” Clearly labelled at the top
Your name or business name Jane Smith / JS Design Ltd
Your address 10 High Street, Bristol, BS1 1AA
Client’s name and address Acme Ltd, 5 Park Road, London, EC1A 1BB
Unique invoice number INV-2026-001 (sequential)
Invoice date 25 March 2026
Description of work Website design — homepage and 5 inner pages
Amount due £2,500.00
Payment terms Payment due within 30 days
Payment method and bank details Sort code, account number, account name

Additional Elements (If Applicable)

Element When needed
VAT number and VAT amount If you are VAT-registered
Purchase order number If the client provided one
Project or job reference If agreed with the client
Expenses breakdown If claiming reimbursable expenses
Late payment terms If you want to enforce interest on late payments
Company registration number If you trade as a limited company

Invoice Numbering

Use a consistent, sequential numbering system. HMRC requires invoice numbers to be unique and sequential (no gaps without explanation).

System Example Notes
Simple sequential 001, 002, 003 Works for low volume
Year-prefixed 2026-001, 2026-002 Easy to identify the tax year
Client-coded ACME-001, ACME-002 Useful if you have few clients
Date-based INV-20260325-01 Clear when invoice was issued

VAT Invoices

If You Are Not VAT-Registered

  • Do not show VAT on your invoices
  • Do not charge VAT to clients
  • Show the total amount due as a single figure

If You Are VAT-Registered

Your invoice must additionally include:

VAT requirement Details
Your VAT registration number e.g. GB 123 4567 89
The net amount (before VAT) £2,500.00
The VAT rate 20%
The VAT amount £500.00
The gross total (including VAT) £3,000.00
Tax point (date of supply) The date the work was completed or the invoice date

Simplified VAT Invoice

If the total including VAT is £250 or less, you can issue a simplified VAT invoice. This only needs:

  • Your name, address, and VAT number
  • Date of supply
  • Description of goods or services
  • Total amount including VAT
  • The VAT rate

Payment Terms

Common Options

Term When payment is due Best for
Due on receipt Immediately Small jobs, one-off clients
Net 7 Within 7 days Urgent or small invoices
Net 14 Within 14 days Freelancers (recommended default)
Net 30 Within 30 days Corporate clients (industry standard)
Net 60 Within 60 days Large companies (push back if possible)
50% deposit + 50% on completion Split payment New clients, large projects
Milestone payments Agreed stages Long-term projects

Late Payment Interest

Under the Late Payment of Commercial Debts (Interest) Act 1998, you are entitled to charge:

Charge Amount
Interest rate 8% + Bank of England base rate (per year, calculated daily)
Compensation £40 (invoices up to £999.99)
Compensation £70 (invoices £1,000–£9,999.99)
Compensation £100 (invoices £10,000+)

You do not need to state this on your invoice for the right to apply, but including it makes enforcement easier.

Chasing Late Payments

Process

Timing Action
Day before due Send a friendly reminder email
Due date + 1 day Send a polite follow-up: “Just checking this has been received”
Due date + 7 days Send a firmer reminder with the invoice attached
Due date + 14 days Phone the client and follow up in writing
Due date + 21 days Formal letter warning of late payment interest and further action
Due date + 30 days Issue a letter before action (pre-legal step)
Due date + 45 days Consider small claims court (Money Claim Online for under £10,000)

Tips for Getting Paid Faster

Strategy How it helps
Invoice immediately on completion Do not delay — invoice the day you finish
Offer multiple payment methods Bank transfer, card, PayPal — make it easy
Set shorter payment terms 14 days instead of 30 for small clients
Request deposits 25–50% upfront, especially for new clients
Use accounting software Automated reminders save you chasing manually
Build payment into contracts Written agreement before work starts

Invoicing Software

Software Cost Best for
FreeAgent From £12/month Freelancers and small businesses
Xero From £15/month Growing businesses
QuickBooks From £12/month Self-employed and small businesses
Wave Free Budget-conscious freelancers
Tide (built-in) Free with Tide account Simple invoicing
Coconut From £8/month Freelancers who want tax tracking

Most accounting software generates professional invoices, tracks payments, and sends automatic reminders. This is worth the monthly cost for the time it saves.

Record Keeping

Requirement Details
Keep copies of all invoices Digital copies are fine
Retention period At least 5 years after the 31 January Self Assessment deadline
Format PDF, paper, or within accounting software
Expenses receipts Keep receipts for any expenses claimed on invoices

Related guides:

Sources

  1. GOV.UK — Late commercial payments