Deposit Invoices for Tradespeople: How to Take One (UK)
Taking a deposit on a job protects you from two of the biggest problems in the trades: customers who cancel after you have bought materials, and finished work that never gets paid. The trick is to invoice the deposit properly rather than take a text-message payment.
The short answer
A deposit invoice is a normal invoice that shows the deposit you need before work starts. UK tradespeople usually ask 20 to 50% for labour-heavy jobs, and the full materials cost up front for kitchens and bathrooms. The balance is invoiced on completion. You charge VAT on a deposit if you are VAT registered. Keeping both invoices digital also readies your records for Making Tax Digital.
How much deposit should I ask for?
There is no legal figure, but the amount you ask should reflect how much of your own money is at risk before the job starts. Most tradespeople match the deposit to the materials and the time they will commit.
Materials-heavy jobs such as kitchens, bathrooms and rewires: cover the full cost of materials up front, often 50 to 100% of the materials total. If the materials cost £5,000, ask for £2,500 to £5,000.
Labour-heavy jobs such as painting and decorating: take 20 to 50% to secure the dates and cover you if the customer cancels.
Small one-day jobs: no deposit is needed. Send the invoice with a card payment link on completion.
What must a deposit invoice show?
Treat the deposit invoice as a normal VAT-style invoice, not a scribbled note. That way it is professional, MTD-ready and easy to defend if a customer disputes it. Every field in the table matters.
Field | What it should show | Why it matters |
|---|---|---|
Your details and the customer's | Business name, address, contact details, job address and date | Makes it a recognised invoice, not a payment request |
Deposit line item | For example "Deposit of 40% of total" with the amount | Shows clearly what has been paid and what is outstanding |
Balance due | For example "Balance of £X due on completion" | Sets expectations and prevents disputes at the end |
Payment terms | Card payment link, bank transfer details, due date | Makes it easy for the customer to pay and keeps you cash-positive |
VAT details | VAT amount and your VAT registration number | Required if you are VAT registered |
CIS status (construction only) | Whether you are a CIS subcontractor and your UTR | The contractor may deduct 20% or 30% from the payment |
InvoiceAdept builds all of this in automatically, so you can send a clean deposit invoice in seconds: see the invoicing features.
Many UK tradespeople also find it helpful to review handling deposit payments as a tradesperson at this stage.
How do I take a deposit step by step?
Quote the job and put the deposit terms in writing on the quote or estimate.
Issue the deposit invoice with a card payment link and the balance due note.
Take the payment before you order materials or book the dates.
On completion, issue the balance invoice and log it against the deposit already paid.
Two clean invoices per job keeps your accounts simple and your cash flow healthy. If you bill a lot of small jobs, a payment link beats a deposit every time, and the platform handles cards and payouts for you: see the pricing and payment options.
Do I charge VAT on a deposit?
Yes, if you are VAT registered. Under UK VAT rules a deposit or advance payment is received at the point the money lands, so the time of supply is the payment date and you account for the VAT then. The rate is the same as the job itself, and you itemise it on the invoice.
If you are sorting this alongside other compliance work, read how to invoice for the first time in the UK.
You must register for VAT once your taxable turnover passes £90,000 in a rolling 12 months, which is why tracking income from deposits and balances matters the moment you are growing. For the rest of the deposit and balance flow, see our CIS invoice guide.
How do deposits fit with Making Tax Digital?
Both the deposit and the balance are income records, so they must be included in your Making Tax Digital for Income Tax (MTD ITSA) updates. MTD becomes mandatory for self-employed sole traders with business income over £50,000 from 6 April 2026, then £30,000 from 2027 and £20,000 from 2028. Keep every deposit digital in an MTD-ready tool from the first invoice so your quarterly returns are accurate.
As you build the records, do not forget the expenses that go with the job, including HMRC approved mileage of 45p a mile for the first 10,000 miles and 25p a mile after that. See the official timeline: Use Making Tax Digital for Income Tax (gov.uk).
Related: see invoice payment terms under UK law for practical next steps.
Do CIS deductions apply to deposits?
If you are a construction subcontractor working under the Construction Industry Scheme, the main contractor deducts tax from the whole payment, and that includes deposits and advance payments for labour. The deduction rate is 20% for subcontractors registered with HMRC and 30% for those who are not. Keep your CIS status, UTR and registration details on hand so the deposit is deducted at the correct rate and no more.
FAQs
How much deposit should I ask for?
Common practice is 20 to 50% for labour-heavy jobs, or the full cost of materials up front (often 50 to 100%) for kitchens, bathrooms and rewires. Enough to cover your materials and protect you if the customer cancels.
Is a deposit invoice the same as a normal invoice?
It is a normal VAT-style invoice with a deposit line and a balance-due note. Invoice the deposit, then invoice the balance on completion: two clean invoices, both MTD-ready and easy to reconcile.
Worth pairing this with our guide to VAT invoice requirements for UK trades.
Do I charge VAT on a deposit?
Yes, if you are VAT registered. A deposit is an advance payment, so the time of supply is the date you receive it and VAT is charged then, at the same rate as the job.
What if the customer cancels after paying a deposit?
Your deposit terms, set out in writing on the quote and the deposit invoice, govern the outcome. Keeping the deposit to cover materials bought and time booked is standard practice, so be clear about it before they pay.
The bottom line
A deposit invoice is the simplest way to stop buying materials out of your own pocket and to make cancelled jobs a thing of the past. Ask what the job costs you up front, invoice it properly, and log every deposit and balance so you are ready for Making Tax Digital. You can set it all up for free and send your first deposit invoice today: start free in 30 seconds.
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