Invoice Calculator UK
Build invoices with VAT, apply discounts, and calculate statutory late payment interest under UK law.
Invoice Line Items
* Exempt supplies are shown for information. No VAT is chargeable on exempt items.
Statutory Late Payment Interest Calculator
Bank of England base rate (4.75%) + 8% = 12.75% statutory rate
| Debt Amount | Fixed Recovery Charge |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999 | £70 |
| £10,000 or more | £100 |
How to Write a UK Invoice
Issuing a correct invoice is a fundamental obligation for any UK business, whether you are a sole trader, partnership, or limited company. Getting it right matters: HMRC can refuse to accept input tax claims if a supplier's VAT invoice is incorrect, and customers may delay payment if invoices are incomplete or confusing.
Required Elements of a UK VAT Invoice
If you are VAT-registered and making a taxable supply to another VAT-registered business, you must issue a full VAT invoice containing: a unique sequential invoice number; the date of issue; your business name, address and VAT registration number; the customer's name and address; the date of supply (tax point) if different from the invoice date; a description of goods or services; the quantity, unit price and total price for each line; any applicable discount; the VAT rate for each item; the total amount of VAT charged; and the total amount payable including VAT.
For sales under £250 (including VAT), a simplified VAT invoice is permitted, which requires fewer fields. Non-VAT-registered businesses do not need to show VAT but should still include an invoice number, date, description, and totals to maintain good records.
Invoice Numbering
Invoice numbers must be sequential and unique. There is no legal requirement to start from number 1, but numbers cannot be reused. Many businesses include letters or prefixes such as the year (e.g. INV-2026-001). HMRC expects invoices to form a clear audit trail. Gaps in invoice numbers can raise questions during a VAT inspection.
Payment Terms in the UK
The standard payment term for B2B transactions is 30 days from the invoice date or delivery of goods and services, whichever comes later. This is the default under the Late Payment of Commercial Debts (Interest) Act 1998. Contracts may specify different terms, but B2B payment terms cannot exceed 60 days unless expressly agreed and not grossly unfair to the supplier. Public sector bodies must pay within 30 days.
Common payment terms you will see include: Net 30 (payment due 30 days after invoice date); Net 60; Due on Receipt; 2/10 Net 30 (2% discount if paid within 10 days, full amount due in 30 days). Always specify payment terms clearly on the invoice face and in the contract.
Late Payment Legislation
The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses the right to charge statutory interest on overdue B2B invoices. The interest rate is the Bank of England base rate plus 8 percentage points. With the base rate currently at 4.75%, the statutory rate is 12.75% per annum, which equates to a daily rate of 0.034932%.
You are entitled to claim this interest from the day after the payment was due. For example, on a £5,000 invoice that is 30 days overdue: daily rate = £5,000 x 12.75% / 365 = £1.747 per day; total interest for 30 days = £52.40. In addition, you may claim a fixed debt recovery charge.
Credit Control Best Practices
Good credit control begins before a sale is made. For significant new customers, consider performing a credit check and agreeing credit terms in writing. Issue invoices promptly on delivery of goods or completion of services. Set up automatic payment reminders at 7 days before due, on the due date, and at 7 days overdue. Politely but firmly follow up by phone on overdue invoices; email alone is easily ignored.
For persistent late payers, consider requiring upfront payment or staged payments. If a debt remains unpaid after reasonable attempts, you can use a debt recovery agency, issue a County Court Claim (formerly Small Claims Court), or instruct a solicitor. For debts under £10,000, the small claims procedure is relatively quick and inexpensive.
Sole Trader vs Limited Company Invoicing
Sole traders must include their own name on all invoices even if they trade under a business name. A sole trader called Jane Smith trading as "Smith Creative" must show "Jane Smith trading as Smith Creative" on invoices. Limited companies must show the full registered company name, company registration number, and registered office address on all business documents including invoices, even if they also show a trading name.
VAT on Invoices
VAT-registered businesses must charge VAT at the appropriate rate: 20% (standard rate), 5% (reduced rate for items such as domestic energy and child car seats), or 0% (zero-rated for food, children's clothes, books). Some supplies are exempt from VAT (financial services, insurance, education, health) and no VAT is charged or reclaimable. Understanding the difference between zero-rated and exempt is important: zero-rated supplies count towards your taxable turnover for VAT registration purposes; exempt supplies do not.
The VAT registration threshold is £90,000 (2025/26). Once your taxable turnover exceeds this in any rolling 12-month period, you must register for VAT within 30 days.
The Prompt Payment Code
The Prompt Payment Code is a voluntary initiative administered by the Chartered Institute of Credit Management. Signatories commit to paying 95% of invoices within 30 days and never imposing unfair payment terms. Large businesses are particularly encouraged to sign. However, a 2023 government review found that many FTSE 350 companies still take 60 to 90 days to pay small suppliers, undermining SME cash flow significantly.