Business·7 min read

How to Invoice as a Sole Trader Builder in the UK

Invoicing correctly protects you legally, helps you get paid faster, and avoids problems with HMRC. If you're operating as a sole trader in construction, there are a few things specific to the trade that differ from general invoicing advice — particularly around CIS and VAT. This guide covers what you actually need to know.

What every invoice must include

HMRC requires all invoices to include certain information. Missing items can delay payment and cause problems if you're ever inspected.

Your full name and address (not just your trading name).
A unique invoice number — sequential numbering is standard.
The date of the invoice.
The customer's name and address.
A clear description of the work done.
The total amount charged.
Your payment terms — when the money is due.

CIS — Construction Industry Scheme

If you work as a subcontractor for another contractor (not directly for a homeowner), CIS almost certainly applies. Here's what that means for your invoices:

The main contractor is required to deduct 20% from your labour charge (not materials) and pay it to HMRC on your behalf.
You still invoice for the full amount. The contractor deducts before payment and gives you a CIS deduction statement.
Your invoice should separate labour and materials clearly — the deduction only applies to labour.
If you're VAT registered, VAT is applied to the full amount before the CIS deduction. The deduction doesn't reduce VAT.
You claim CIS deductions back through your Self Assessment tax return at year end. Keep every statement you receive.
If you have 'gross payment status' with HMRC (you've applied and been approved), contractors pay you in full and CIS doesn't apply.

VAT

You must register for VAT if your turnover exceeds £90,000 in any rolling 12-month period (2024/25 threshold). Once registered:

Add 20% VAT to most construction work on existing residential properties.
New build construction is zero-rated — meaning no VAT charged to the customer.
Some residential conversions and renovations of empty properties are reduced-rated at 5%.
Include your VAT registration number on every invoice once registered.
Show the VAT amount separately on the invoice: subtotal, then VAT, then total.
Submit VAT returns quarterly (or monthly if you request it) via HMRC's Making Tax Digital system.

Retention

Retention is common in commercial construction — the customer holds back 3–5% of the contract value for 6–12 months as security against defects. If your contract includes retention:

Invoice for the full amount but note the retention clearly: 'Less 5% retention: -£XXX' with the retained amount and when it falls due. When the retention period ends, raise a separate invoice just for the retained amount.

Payment terms

Standard payment terms in UK construction are 14 days for domestic work and 30 days for commercial. Whatever you agree, state it clearly on every invoice. For domestic customers, many tradespeople request payment on completion or within 7 days. If you're doing a large job with a payment schedule, invoice for each stage as it completes rather than waiting until the end.

Late payment: your legal rights

The Late Payment of Commercial Debts (Interest) Act 1998 gives you the right to charge interest and a fixed debt recovery fee on overdue invoices from businesses (not consumers):

Interest at 8% above the Bank of England base rate from the day payment was due.
A fixed recovery fee: £40 for debts under £1,000, £70 for £1,000–£9,999, £100 for £10,000+.
For consumer (domestic) customers, interest is governed by contract law rather than this Act, so your terms need to state the rate if you want to charge it.
Sending a polite but clear letter stating the overdue amount, the date it became due, and the interest you're accruing tends to prompt payment faster than chasing by phone.

Tip

Always send invoices on the same day as completing the work, or as agreed in the payment schedule. The longer you wait to invoice, the longer you wait to get paid — and the harder it is for customers to dispute work that's fresh in their memory.

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