What must a builder’s invoice include?

GOV.UK lists what an invoice must include, whether or not you are registered for VAT:

• A unique identification number.
• Your business name, address and contact details.
• The name and address of the customer you are invoicing.
• A clear description of what you are charging for.
• The date the work was done or the goods were supplied.
• The date of the invoice.
• The amounts charged, any VAT, and the total owed.

Make the description carry the job. "Building works" tells a customer nothing. "Rear extension, second stage payment on roof watertight, as quote Q-1182" ties the invoice to the quote and to a stage the customer can see for themselves. That is what an accounts department needs before it pays, and if payment turns into a dispute, an invoice that matches the quote line for line is far easier to prove.

NoteOnly VAT-registered businesses can issue VAT invoices. If you are not registered, show no VAT on the invoice at all. If you have just registered and are waiting for your number, the rules for that gap are in the VAT registration threshold for builders.

If you are VAT registered and you supply standard-rated or reduced-rated work to another VAT-registered business, you must give them a VAT invoice: it is their evidence for reclaiming the VAT. HMRC’s VAT guide, Notice 700, lists what it must show:

• A sequential number, from one or more series, that uniquely identifies the invoice.
• The time of supply, known as the tax point.
• The date of issue, where it differs from the tax point.
• Your name, address and VAT registration number. You can invoice under a trading name, but the name and address you are registered under must appear somewhere on the document.
• The customer’s name and address.
• A description that identifies the work or goods.
• For each description, the quantity or extent, the VAT rate and the amount excluding VAT.
• The total excluding VAT, the rate of any cash discount offered, and the total VAT, in sterling.
• The unit price, where the work breaks into countable units such as an hourly or daily rate.

Issue it within 30 days of the tax point. Where one invoice mixes rates, zero-rated items, new-build work for example, have to show clearly that no VAT is payable, with their own separate total.

Simplified invoices

Where the supply is £250 or less and the customer agrees, you can issue a simplified invoice: your name, address and VAT number, the tax point, a description, and for each VAT rate the total including VAT and the rate. Over £250, or where the customer wants the full version, issue the full invoice.

Authenticated receipts

Construction has one option of its own. On contracts with stage or periodic payments, the customer can prepare a receipt carrying every particular of a VAT invoice and send it with the payment, and you authenticate it. Both sides must agree to use it, and if you do, you must not also issue a VAT invoice for the same supply.

A limited company

The trading disclosure regulations made under section 82 of the Companies Act 2006 require a company to show its registered name on its invoices and other demands for payment (regulation 24 of the 2015 Regulations). Its registered number, the part of the UK where it is registered and its registered office address must appear on its business letters, order forms and website (regulation 25). Most companies print them on the invoice too, which costs nothing.

If a business letter names any director, other than in the text or as the signatory, it has to name all of them (regulation 26). GOV.UK gives the same advice for invoices: name one director and you name every director.

A sole trader or partnership with a business name

If you trade under a name other than your own surname, with or without your forename or initials, section 1202 of the Companies Act 2006 requires your name and an address where documents can be served on you to appear, legibly, on your business letters, written orders, invoices and receipts, and written demands for payment. A partnership names every partner. "J Smith" needs nothing more; "Smith and Sons Building" does.

Under sections 83 and 1206 of the Companies Act 2006, a claim on a contract made while you were breaking the disclosure rules can be dismissed if the customer shows it lost money, or could not bring its own claim, because of the breach, unless the court thinks it just and equitable to let the claim go on.

A reverse charge invoice still has to carry everything a VAT invoice needs. HMRC’s technical guide adds a note making clear that the domestic reverse charge applies and that the customer has to account for the VAT, and either the amount of VAT due under the reverse charge or, where that cannot be shown, the rate. The VAT is never added to the total charged.

The VAT regulations require the reference ‘reverse charge’, and HMRC gives three examples of wording that meet it: "VAT Act 1994 Section 55A applies", "S55A VATA 94 applies" and "Customer to pay the VAT to HMRC". Whether the reverse charge applies at all depends on the work and on the customer, including one condition only the customer can answer; that is all in what is the VAT domestic reverse charge.

Under the Construction Industry Scheme the contractor deducts tax from the labour in your payment only. HMRC tells contractors to start from the gross amount of your invoice and take away VAT, materials you paid for directly, plant hired for the job, consumable stores, fuel other than for travelling, and the cost of manufacturing or prefabricating materials. The rate then applies to what is left: 20% if you are registered, 30% if you are not, and nothing if you hold gross payment status.

So split the invoice. Show labour and materials as separate lines, with plant hire separate where you hired it in for the job, and keep the receipts. The contractor can ask for evidence of what you paid for materials, and where there is none, the contractor estimates the cost. One lump sum leaves the estimate to somebody else.

The deduction itself is the contractor’s to make and to evidence. Within 14 days of the end of each tax month it must give you a payment and deduction statement, and that statement, not your invoice, is what you use to claim the deduction back. The arithmetic is in how CIS deductions are calculated.

An illustrative invoice from a VAT-registered plastering subcontractor, trading as a limited company, to a main contractor that is registered for VAT and CIS and has not said it is an end user, so the reverse charge applies.

If the contractor has verified the subcontractor at the standard rate, it deducts 20% of the £2,640 labour, which is £528, pays £2,972, and gives a statement showing the gross, the materials and the deduction. Under the reverse charge it also accounts for the £700 as output tax on its own VAT return and reclaims it as input tax, subject to the normal rules.

The same work for a homeowner would add VAT at 20% to the total and drop the reverse charge note. Every other line stays.

The terms you agreed, written as a date. "Due by 29 November 2026" is harder to misread than "30 days". If you agreed nothing with a business customer, payment is late 30 days after the customer gets the invoice or after the work is done, whichever is later, and statutory interest and fixed compensation become available. The figures are in getting paid faster.

With a homeowner, the terms are whatever the accepted quote said, so the quote is where to set them: the deposit, the stage payments and the days to pay on completion.

Invoice or application for payment?

On a contract that runs on applications for payment, the application comes first and the invoice follows the certified sum. Sending an invoice where the contract asks for an application can cost you the protection that makes an unanswered application payable in full; see applications for payment vs invoices.

VAT follows the paperwork. On a construction contract with stage or interim payments, the tax point is the earlier of receiving payment or issuing a VAT invoice, so an application that is not a VAT invoice does not trigger VAT, and a VAT invoice issued before you are paid does. For retention, the tax point waits until it is paid to you or you invoice it.

If a correct invoice still goes unpaid, the steps from the letter before claim to adjudication are in how to recover an unpaid invoice.

Estimark raises the invoice against the job, so the description follows the quote, and emails it as a branded PDF. Net, rate and VAT are kept apart on every invoice. Flag a customer for the reverse charge and their invoices show no VAT, the rate they must account for and the section 55A wording, and a certified payment application becomes an invoice on the same job. Payments are recorded against a ledger with credit notes, statuses run from unpaid and partially paid to paid, credited and void, and invoices push to Xero, QuickBooks and Sage Business Cloud with payment status coming back each day. See CIS and the VAT reverse charge in Estimark.

NoteCustomers cannot pay by card or Direct Debit through Estimark, so put your bank details on the invoice. Whether the reverse charge applies is your decision, recorded on the customer, not one Estimark makes for you.

• VAT guide, VAT Notice 700, sections 16 and 17 (HMRC)
• Buildings and construction, VAT Notice 708, section 23 (HMRC)
• VAT domestic reverse charge technical guide (HMRC)
• Invoicing and taking payment from customers (GOV.UK)
• Names and Trading Disclosures Regulations 2015, Part 6 (legislation.gov.uk)
• Companies Act 2006, section 83 (legislation.gov.uk)
• Companies Act 2006, Part 41 Chapter 2, business names (legislation.gov.uk)
• What you must do as a CIS contractor (GOV.UK)
• Late commercial payments: charging interest and debt recovery (GOV.UK)