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Introduction
What must an invoice include, and what details should you show on your independent contractor invoice? Indeed, getting the correct IT contractor invoice details are a consideration from the outset when you are UK contracting and working for yourself. Therefore, in this article we will investigate how to bill as a contractor. What’s more, we will also look at the contractor invoicing requirements (UK) and how to invoice a client correctly.
Whether you are a sole trader or you trade through and run your own company, you will create UK contractor invoices for the work which you do for your client or customer. Indeed, in this article we will look at both how to invoice as a contractor and what needs to be on an invoice (UK) to your client. In addition, we will also consider an independent contractor invoice template. To clarify, for many UK contractors, it is good to have a template that they can use to create invoices to their client on. As a result, they can send the invoice before receiving payment.
Initial thoughts
As a UK business owner, it is important that you know how invoicing for contractors actually works. Certainly, this a key part of contracting day to day when you run your business. Basically, when we look at how to invoice a company, you bill for your time worked and perhaps even expenses incurred. However, when you do this there is a certain process to follow. Therefore, let’s now take the time to investigate how to invoice as an independent contractor. In addition, let’s consider what should be on an invoice and how to do this correctly.
Other initial considerations for UK contractor invoicing
Self-billing agencies
Please take note that it is common for some agencies and end clients to self-bill you as a limited company contractor for their time. Furthermore, your company is not required to create an invoice for your UK contracting work in this scenario. However, as part of this process, you will complete timesheets and send these to the agency or client. What’s more, you will do this on a weekly or monthly basis.
If your client is not operating the self-bill system, it will be important when you bill your client to raise a professional contractor invoice. Therefore, with regard to what should a contractor invoice include, this will contain all your business information. In other words, it will show your contact details such as company name, address, phone number, and email address. In addition, it should also include how your client can make payments to your company. What’s more, you should send your work invoice with bank details included. Indeed, if you do not show this it could delay payments to your company.
The current invoice date rules (UK) -invoices for contractors
When we investigate what should you put on an invoice and how to invoice as a contractor, it is important to comply with current laws. Therefore, you must ensure that you include the relevant details when you do your UK contractor invoicing. What’s more, there are extra considerations for your contractor’s invoice in terms of your invoice details if you register for VAT (as most contractors do). However, when we consider how to do an invoice (UK) and what to put on an invoice, our VAT guide also gives an overview of what to expect when registered for VAT.
Please have a read of our article which covers tax tips for limited company contractors. Certainly, this covers all sorts of areas to consider when you are UK contracting. In addition, it includes lots of top tips when you run your own business. To summarise, this article covers many aspects when you are contracting in the UK. What’s more, it explains how to operate tax efficiently and how to maximise your pay as a UK contractor.
UK contractor invoices -what must an invoice include?
Invoice for contractor -what should be on a contractor invoice?
Let us now consider what should an invoice include when you create this. Indeed, it is important to get the details right before you send your independent contractor invoice to your customer or client. Certainly, there are specific details that your UK contractor invoices should display. Therefore, let’s look at how to create an invoice as an independent contractor. To sum up, when you create your invoices, the correct and complete details should always be shown.
What is on an invoice for contractors?
In no particular order, the details to show on your contractor invoice are:
| 1 | The word `invoice.’ That is to say, you could show the words `professional invoice’ if you charge for your professional time. |
| 2 | A unique invoice number on your contractor’s invoice. What’s more, these should be sequential and the first professional contractor invoice could be number 001. Furthermore, the second one could be number 002, etc. Therefore, if you use a unique identification number approach, this is a logical method. In addition, it is also a straightforward referencing system. |
| 3 | The date of the invoice. You will raise an invoice after you make a sale or complete some work, therefore the invoice date should be after this. Indeed, this will be the `supply’ date. |
| 4 | Your business details. In other words, your name, address, and contact information. |
| 5 | Your VAT registration number if your business is registered for VAT. Further, you can show the VAT number either at the top or bottom of your VAT invoices. |
| 6 | The official address details of your client. Indeed, this will include their full name and address. |
| 7 | A clear description of your products or services, e.g., 35 hours at `x’ rate per hour. In addition, the charges should also include any expenses that you are to recharge. |
| 8 | The date or dates when you provided the goods or service. |
| 9 | The due date for payment of the invoice. |
| 10 | The amount(s) that you are charging for your services. |
| 11 | The VAT amount, if relevant. To clarify, this will be 20% of the services cost. |
| 12 | The total cost of the invoice. To sum up, this is the final sum of your charges plus VAT and the total amount due from your customer or client. |
An example of how an invoice may look from your contractor limited company
Now, let’s investigate what to show on your contractor invoice. Therefore, here is a basic example of how your UK contractor invoice may look:
| Consulting fees -5 x £400.00 | 2,000.00 |
| Expenses | 200.00 |
| 2,200.00 | |
| VAT @ 20% | 440.00 |
| Gross invoice | 2,640.00 |
Other areas to consider in respect of contractor invoicing
Independent contractor invoice requirements (UK) when you recharge expenses
When we look into invoices for independent contractors, you may be able to recharge expenses. However, this is of course that you agree to this in advance with your customer or client. What’s more, if this is the case in your contractor billing invoice, you will need to add these in after the seventh step as mentioned above. Therefore, you will do this as part of your contractor invoicing to your client or customer.
The expenses that you charge will also need `netting down’ before you add them on to your contractor’s invoice. Please see our other article which covers recharging expenses. In short, this explains how the `netting down’ process works. Indeed, once the expenses are netted down correctly and VAT is recharged you will arrive at the total amount which is owed to your company.
Contractor invoices -payment terms
It is advisable to show your payment terms and payment due date on all invoices which you issue. Indeed, this will help ensure they are paid on time. However, it is also good to mention that your company will appreciate quick and prompt payment.
Per HMRC guidance, unless you agree on a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service. In addition, you also have the right to charge interest for late payments, but you can choose not to.
Therefore, the law assumes that a standard thirty-day payment period exists if there are no other payment terms that are stated.
Do you put bank details on an invoice?
As part of how to invoice as a contractor, should I put my bank details on an invoice? Indeed, this is your choice. However, showing how your client can send the payment to your business bank account is advisable. Most importantly, this will include your business sort code and account number. Furthermore, please also make sure that you request electronic payment.
How to issue an invoice and send your contractor invoices on to your client
There are many computer applications that you can create your UK contractor’s invoices on nowadays. Therefore, you can look to use some independent contractor invoicing software. Certainly, such programs include Word, Excel, PowerPoint, and many others. However, to give it a more professional look, you could convert your document to PDF format.
There are also specific contractor invoice software packages out there when you are invoicing as a contractor. Indeed, it is good to use an invoicing platform for contractors and many modern digital platforms, such as FreeAgent, will contain an invoicing function. As a result, they allow you to create your invoice on their platform, which can save time.
When you send a contracting invoice to your client or customer, you could send it through the regular post. However, nowadays, it is much quicker and less costly to send this via e-mail.
Final thoughts
Finally, when we consider how to invoice as a contractor, an online system for your company’s record-keeping may also let you generate your contractor invoicing on the site. What’s more, if it does, the system will show all the correct invoice details for your small business. Furthermore, it will do all of the calculations for you. Indeed, this will include your chargeable time and the expenses you are recharging. The online system will also work out the VAT, too, for you.
When you have an online system, this may also allow you to email the invoice directly to the client. To sum up, when you do this, it will be a time saver as it lets you track your invoices online and see which ones are currently outstanding.
If you are dealing with a customer or client for the first time, it would be wise to take down details of their accounts department. However, should the need arise, it would also be wise to follow through and ensure that you receive the payment in due course.
As a final note, regarding how should an invoice look, if you need a free independent contractor invoice template (UK), please send a message on the contact form. What’s more, this form is at the bottom of the home page, and we will be happy to provide this.
Link to Contractor Advice UK group on
