Invoicing
Getting paid on time: invoicing and late payment rules for UK trades
In short: invoice the day the job finishes, include everything the law requires, state your payment terms, and make it easy to pay by card or bank transfer. If a business customer pays late, UK law lets you charge interest at 8% above the Bank of England base rate plus a fixed fee of £40, £70 or £100. For homeowners, what you can charge depends on what you agreed in your quote.
Invoice the day you finish
The longer you wait, the longer you wait to be paid. Send the invoice the same day, ideally from your phone before you leave the job. A clear invoice with a payment link sent while the customer is still pleased with the work gets paid far faster than one that arrives a fortnight later.
What a trade invoice must include
Every invoice needs:
- A unique invoice number, following on from the last one
- Your business name and address, and your contact details
- If you're a limited company, the full registered name, company number and registered office address
- The customer's name and address
- The invoice date, and the date the work was done if it's different
- A description of the work and any materials
- The amount for each item, and the total
- Your payment terms and how to pay, such as bank details or a card payment link
If you're VAT registered, a full VAT invoice also needs your VAT registration number, the price of each item before VAT, the VAT rate, the total VAT charged and the total including VAT.
Payment terms
Say on the invoice exactly when payment is due, for example "Payment due within 14 days" or "Payment due on completion". For homeowners, payment on completion or within 7 days is common. For business customers, 14 or 30 days.
If you haven't agreed a payment date with a business customer, the law treats the payment as late 30 days after they receive the invoice (or after the work is done, if that's later). Businesses can agree longer terms, but the usual limit is 60 days unless the terms are fair to both sides (GOV.UK).
What you can charge business customers who pay late
The Late Payment of Commercial Debts (Interest) Act applies to business-to-business work, for example a builder, letting agent or landlord's company paying you. If they pay late, you can claim:
Statutory interest at 8% plus the Bank of England base rate, unless your contract sets a different rate. To work it out: debt × annual rate ÷ 365 = interest per day, then multiply by the number of days late (GOV.UK).
A fixed debt recovery fee on top, once per invoice (GOV.UK):
| Size of the debt | Fixed fee you can claim |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
To claim interest, send a new invoice for it. Many trades don't charge it on a first late payment, but mentioning that you're entitled to it often speeds things up.
Homeowners who pay late
The Late Payment Act doesn't cover consumers. With homeowners, you rely on your agreement with them, so put your payment terms in the quote they accept. If a homeowner won't pay, the usual steps are a polite reminder, then a firmer letter, then a formal letter before action, and finally a claim through the small claims process. Citizens Advice and GOV.UK explain the process.
A reminder routine that works
- On the due date: a friendly reminder with the payment link again.
- 7 days late: a second reminder: "This is now overdue, please pay today."
- 14 days late: a phone call. Ask when they will pay, and note what they say.
- 30 days late: a final letter. For business customers, say that you'll add statutory interest and the fixed fee.
Automating the first two reminders saves you the awkward conversations, and most late payers are simply disorganised rather than unwilling.
Make paying easy
Every extra step between "I should pay that" and paying costs you days. A card payment link on the invoice lets customers pay in seconds, often the same day. Bank transfer details with a clear reference (use the invoice number) are the minimum.
Common questions
How long does a customer have to pay an invoice in the UK?
Whatever you agreed. If you haven't agreed a date with a business customer, payment becomes late 30 days after they receive the invoice. For homeowners, it depends on the terms in your quote or contract, so always state them.
Can I charge interest on a late invoice?
On business-to-business invoices, yes: statutory interest of 8% plus the Bank of England base rate, plus a fixed fee of £40, £70 or £100 depending on the size of the debt. For homeowners, only if your agreement with them includes a fair late-payment term.
What must a VAT invoice include?
Everything a normal invoice needs, plus your VAT number, each item's price before VAT, the VAT rate, the total VAT and the total including VAT.
Should I ask for payment on completion?
For homeowners and smaller jobs, payment on completion is common and reasonable, especially with a card payment link. For larger jobs, use a deposit and stage payments so you're never owed too much at once.
What is the domestic reverse charge?
For VAT-registered subcontractors working for a VAT-registered contractor under the Construction Industry Scheme, you don't charge VAT on the invoice. Instead, you mark it as reverse charge and the contractor accounts for the VAT. It doesn't apply to work for homeowners or other end users.
Where TradeDay fits
TradeDay turns finished jobs into invoices in a couple of taps and adds a card payment link through your own Stripe account. It sends reminders when invoices go overdue, records part payments, and sends invoices and payments to Xero, so you can see at a glance who still owes you.