As a small business owner in the UK, it’s important to understand the ins and outs of VAT (Value Added Tax) and how it affects your business. One crucial aspect of VAT is the VAT invoice, which is a document that outlines the details of a transaction and is used to claim back VAT from HM Revenue and Customs (HMRC). In this article, we will explain what should be included in your VAT invoice and provide a handy template to help you get started.
Firstly, it’s important to note that not all businesses are required to register for VAT. If your business has a taxable turnover of over £85,000 in a 12-month period, then you must register for VAT. However, if your turnover is below this threshold, you can choose to register voluntarily. Once registered, you must charge VAT on your goods and services and submit VAT returns to HMRC.
Now, let’s dive into what should be included in your VAT invoice. The following information is required by HMRC to be included on your invoice:
1. Your business name and address
This should be your registered business name and address, not a trading name or PO Box address.
2. Your VAT registration number
This is the unique number assigned to your business when you register for VAT.
3. Invoice number and date
Each invoice should have a unique number and the date it was issued.
4. Customer’s name and address
Include the name and address of the customer you are invoicing.
5. Description of goods or services
Provide a clear and detailed description of the goods or services you are invoicing for.
6. Quantity and unit price
Include the quantity of goods or services provided and the unit price.
7. Total amount excluding VAT
This is the total amount of the goods or services before VAT is added.
8. VAT rate and amount
State the VAT rate being charged and the amount of VAT being added to the total.
9. Total amount including VAT
This is the final amount that the customer must pay, including VAT.
10. Payment terms
Include the payment terms, such as the due date and any discounts for early payment.
11. Your business bank details
Provide your business bank details for the customer to make payment.
12. Any additional information
You may also include any additional information, such as a purchase order number or reference.
It’s important to note that if you are selling goods or services to another VAT-registered business, you must also include the customer’s VAT registration number on the invoice.
Now that you know what should be included in your VAT invoice, it’s time to create one. To make things easier for you, we have created a handy VAT invoice template that you can use for your business. Simply fill in the required information and you’re good to go. You can find the template on our website, Small Business UK.
In conclusion, as a small business owner in the UK, it’s crucial to understand the importance of a VAT invoice and what information should be included. By following the guidelines provided in this article and using our handy template, you can ensure that your VAT invoices are accurate and compliant with HMRC’s requirements. Remember, keeping proper records and submitting accurate VAT returns is essential for the success of your business.
