How to Invoice as a Contractor UK (2026 Guide)

Whether you operate through a limited company or as a sole trader, invoicing correctly as a UK contractor is essential for getting paid on time and staying compliant with HMRC.

This guide covers everything you need to know — from what to include on your invoice to IR35 considerations.

What Must a UK Contractor Invoice Include?

Every valid contractor invoice in the UK must contain:

Your name or business name and address
Client's name and address
A unique invoice number (sequential is fine — e.g. INV-001)
Invoice date and payment due date
Description of services provided
Amount charged (excluding VAT if applicable)
VAT number and VAT amount (if you're VAT registered)
Total amount due
Payment details — bank account, sort code, or payment method

Sole Trader vs. Limited Company Invoices

Sole Trader

If you operate as a sole trader, your invoice should include your own name. You can trade under a business name, but your legal name must appear somewhere on the invoice.

Limited Company

If you're contracting through a limited company, your invoice must include:

Your registered company name (as it appears at Companies House)
Your registered office address
Your company registration number
Your VAT number (if VAT registered)

IR35 and Invoicing

IR35 affects how HMRC views your working arrangement — but it doesn't change the format of your invoice. Whether you're inside or outside IR35, you still send an invoice to your client or their umbrella company.

If you're inside IR35, the fee-payer (agency or end client) is responsible for deducting Income Tax and National Insurance before paying you. Your invoice will reflect the gross amount, but you'll receive a net payment.

If you're outside IR35, you invoice as normal and handle your own tax through Self Assessment or your limited company.

Do Contractors Need to Charge VAT?

You must register for VAT if your taxable turnover exceeds £90,000 in a rolling 12-month period (as of 2026). Once registered, you must charge VAT on your invoices and file quarterly VAT returns.

Even below the threshold, you can register voluntarily — which can be beneficial if your clients are VAT-registered businesses who can reclaim it.

Standard VAT rate is 20% for most contractor services.

Payment Terms for UK Contractors

Common contractor payment terms:

30 days net (most common for B2B)
14 days net (for faster payment)
7 days net (for short engagements)

Under the Late Payment of Commercial Debts (Interest) Act 1998, you're entitled to charge 8% above the Bank of England base rate on overdue invoices.

How to Get Paid Faster as a Contractor

Send the invoice immediately after completing work — don't wait until end of month
Include clear payment details — BACS, Faster Payments, or a payment link
Follow up at day 7 if unpaid, again at day 14
Add late payment clauses to your contract and reference them on the invoice

Free Invoice Tool for UK Contractors

Billdrop is a free invoice generator built specifically for UK freelancers and contractors. You can:

Create a professional invoice in under 2 minutes
Add your logo, set VAT, and customise payment terms
Download as a PDF instantly — no account required
Choose from Classic, Modern, or Minimal templates

No sign-up needed to get started. Create your first invoice now.

This article is for informational purposes only and does not constitute legal or financial advice. Consult a qualified accountant or tax adviser for guidance specific to your situation.