what is a vat invoice
A VAT invoice is an invoice issued by a VAT-registered business that shows the VAT charged on a sale. It must include your VAT registration number, the VAT rate and the VAT amount as separate lines, alongside the usual invoice details. You must issue one when you make a taxable sale to another VAT-registered business, and your customer needs it to reclaim the VAT they paid.
Why VAT invoices exist
VAT (Value Added Tax) is a consumption tax used across the UK and EU. The equivalent in Australia, New Zealand, Canada, India and Singapore is called GST, and the US uses sales tax. A VAT invoice is the document that lets the tax flow correctly through the chain: it tells your customer exactly how much VAT they paid, which a VAT-registered customer can then reclaim from the tax authority.
Because of this reclaim mechanism, a VAT invoice carries more required detail than an ordinary invoice. Without the right information, your customer cannot recover the VAT — so getting it wrong has a real cost for them.
What a full VAT invoice must show
A full VAT invoice includes everything on a standard invoice plus VAT-specific fields. These are the items a VAT-registered supplier must include.
- A unique, sequential invoice number
- Your business name, address and VAT registration number
- The invoice date (and tax point, if different)
- The customer's name and address
- A description of the goods or services
- The rate of VAT for each item (e.g. 20%, 5%, 0%)
- The amount excluding VAT, the VAT amount, and the total including VAT
Full vs simplified invoices
For smaller sales (in the UK, totals up to £250 including VAT), you can issue a simplified VAT invoice with fewer fields — you can show the gross amount and the VAT rate without itemising the VAT separately for each line. For larger sales, a full VAT invoice is required.
invoiceme adds any number of named tax lines — VAT, GST or sales tax — at whatever rate you set, and shows the tax amount and gross total clearly, so your invoices meet what a VAT-registered customer expects.
When you must issue one
If you're VAT-registered and you make a standard-rated or reduced-rated sale to another VAT-registered business, you must issue a VAT invoice, generally within 30 days of the supply. If you're not VAT-registered, you must not charge VAT or issue a VAT invoice at all.
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faq
- Can I issue a VAT invoice if I'm not VAT-registered?
- No. Only VAT-registered businesses may charge VAT and issue VAT invoices. If you're below the registration threshold and not voluntarily registered, your invoices should not show any VAT or a VAT number.
- What's a 'tax point' on a VAT invoice?
- The tax point (or time of supply) is the date that determines which VAT period a sale falls into. It's usually the invoice date, but can be the date goods were supplied or payment received. It matters for when the VAT is due.
- Do I need a VAT invoice to reclaim VAT?
- Yes. To reclaim VAT on a purchase, you generally need a valid VAT invoice from the supplier showing their VAT number and the VAT charged. A receipt or a non-VAT invoice usually isn't enough for a full reclaim.