Deposit invoice template UK (2026): VAT tax point, refunds and what to put on it
A deposit invoice is not a quote with a round number on it. It is a numbered bill for part of an agreed job, sent before the work starts, so you are not funding someone else's kitchen units out of your current account.
UK law does not set a maximum deposit percentage. It does set fairness rules for consumers, a VAT tax point when the money lands, and - if you are a subcontractor billing a contractor - CIS on the labour in that payment. Mix those up and you either keep money you are not entitled to, or you account for VAT in the wrong period.
This replaces a thinner version of the same slug. Unsourced late-payment percentages are not used here. What you can cite is the late-payment statute for business customers: statutory interest at 8% plus Bank of England Bank Rate, and a fixed recovery sum of £40, £70 or £100 depending on the size of the debt. Bank Rate is 3.75% as of the Bank of England's 30 July 2026 decision (next MPC scheduled 17 September 2026), so the statutory rate is 11.75% until the next change. Check the live Bank Rate before you put a number on a chasing letter.
InvoiceAdept is invoicing software from Tech Me Today Ltd, Companies House 15917255, ICO ZB944663. Free is five invoices a month. Pro is £7.99 and includes WhatsApp send and Stripe with no extra InvoiceAdept platform fee. Pro+ is £12.99 and is the CIS plan. We do not file CIS300 and we do not file Making Tax Digital updates to HMRC. Figures in the tables are worked examples, not a price list. This is general information, not tax or legal advice.
In short
Agree the job in writing. Invoice a deposit that tracks real costs - materials you must order, plant you must hire, a week you must book off other work - not an 80% "non-refundable" grab. Number it. Label it DEPOSIT. Show the full job value, the deposit, and the balance still to invoice.
If you are VAT-registered, that deposit is usually a tax point on the day you invoice it or the day you receive it, whichever is first. Account for VAT on the deposit in that period, not when the bathroom is signed off. If the customer is a VAT-registered contractor under CIS and reverse charge applies, show the VAT and do not add it to what they pay. CIS, when it applies, sits on labour only.
Then invoice the balance as a separate document. Credit the deposit. Do not recycle the same invoice number.
The general trades walkthrough is how to invoice a UK client as a tradesperson. First-time sole-trader fields sit in how to invoice for the first time in the UK. This page is the deposit document.
When a deposit is usual - and when it is not a licence to overcharge
There is no Act of Parliament that says "trades may take 25%". What exists is contract law plus, for consumers, the Consumer Rights Act 2015 and the Competition and Markets Authority's unfair-terms work on deposits and advance payments.
The CMA's at-a-glance guide (UCT 04 Deposits) draws a useful line:
A deposit that merely reserves the job should be a small percentage of the price.
An advance payment should reflect expenses you will actually incur carrying out the contract, and should still leave a reasonable amount to pay on completion.
Terms that keep a large advance "in all circumstances", or that make a substantial payment non-refundable whatever the reason for cancelling, are the sort of clauses the CMA flags as potentially unfair.
For a consumer customer, a blanket "deposits are non-refundable" line is the one that gets struck out. You can retain a genuine pre-estimate of loss: non-returnable units already ordered, scaffolding already standing, the day you turned other work away after they signed. You cannot keep the whole pot because the small print said so and you have suffered no loss.
For a business customer, the contract you both agreed governs the deposit. It still has to be clear. A WhatsApp "yeah 30% to book it" with no job value and no refund terms is how you end up in the county court arguing about what "it" was.
Deposits are usual in UK trades when you are about to spend money you cannot get back: a kitchen fitter ordering units to a drawing, a plumber buying a combi, a roofer hiring scaffold, a builder booking groundworkers. They are usually unnecessary on a £180 leak or a one-hour consumer-unit swap you can finish the same day. Invoice on completion with a short due date instead. The plumber and electrician templates walk the domestic versus contractor split; this page is the money-before-the-van version.
Do not treat the percentages in the worked example below as a market survey. They are one way to structure a kitchen job so the deposit covers the units. Your quote should follow your costs.
Deposit versus stage payments versus retention
They are not the same document.
What it is | When you invoice it | What it is not | |
|---|---|---|---|
Deposit / advance | Part of the price, paid before (or as) work starts | When you take the money, or when you raise the VAT invoice - whichever is first | A security against hired kit that you will refund |
Stage payment | A slice of the price tied to a milestone | When that stage is done (or when the contract says it is due) | "I'll bill the rest at the end" with no stages written down |
Retention | Money held back after completion against snags | Final invoice shows the full value, the retention withheld, and the date it becomes due | A second deposit |
VAT Notice 700 is explicit that most deposits are advance payments and create a tax point when received. A security deposit on hired goods that is refunded when the goods come back safely - or kept only to cover loss or damage - is different: GOV.UK on VAT deposits says you do not account for VAT on that kind of returnable security.
If the job will run more than a fortnight, a small deposit plus stage invoices is usually cleaner than one huge advance. Each stage is its own invoice, its own tax point, its own due date.
What must be on the deposit invoice
GOV.UK's invoicing overview is short: if both you and the customer are VAT-registered you must give an invoice, and it must say how much they pay and when. A receipt is something else - it acknowledges money that has already landed. See invoicing and taking payment.
If you are VAT-registered, VAT Notice 700 is the document for the full VAT invoice: unique sequential number, tax point, your name, address and VAT number, the customer's name and address, a description, quantities, net amounts, the VAT rate and the VAT in sterling.
Then add the deposit-specific lines, because a generic "kitchen installation £2,100" is how a customer later says they have paid in full.
Field | Why it is there |
|---|---|
Label: DEPOSIT INVOICE | Stops anyone treating it as the final bill |
Unique invoice number | Sequential. Do not reuse it on the balance invoice |
Quote or contract reference | Ties the deposit to an agreed scope |
Full agreed job value (net, VAT, gross) | So the percentage means something |
Deposit amount as pounds and a percentage of that job value | "25% of £8,400 inc. VAT = £2,100" |
Balance remaining after this invoice | What you will bill later |
Due date | Deposits are usually due on receipt or in 7 days. Write the date |
Refund / cancellation terms | What you keep if they cancel, and why |
How to pay | Sort code, or a Stripe link on Pro |
If you trade as a limited company, show the registered name, company number and registered office. InvoiceAdept is operated by Tech Me Today Ltd, Companies House 15917255, ICO ZB944663. Put the same standard on your own paperwork.
Do not invent a "VAT: N/A" line if you are not registered. The VAT registration threshold is £90,000 of taxable turnover - GOV.UK, how VAT works. Below that, leave VAT off unless you have voluntarily registered.
VAT tax point: the deposit is not "VAT at the end"
This is the bit that trips VAT-registered tradespeople.
HMRC's VAT: instalments, deposits, credit sales is the source:
> The tax point will be either the date you issue a VAT invoice for the advance payment, or the date you receive the advance payment, whichever happens first.
You include the VAT due on the deposit on the VAT return for that period. If the customer later pays the balance before the work is finished, that creates a further tax point for the balance - again, invoice or payment, whichever is first.
VAT Notice 700, paragraph 14.2.3, says the same thing in the main VAT guide: most deposits serve as advance payments and create tax points when you receive them.
Worked timing, not a price list. You are VAT-registered. You take a £3,000 deposit (including VAT at 20%) in March for a job that starts in May:
Net deposit: £2,500
VAT on the deposit: £500
That £500 belongs on the March VAT return, not the May one
If you use the VAT cash accounting scheme, you account for VAT when you actually receive the money (unless it is a returnable security deposit). Issuing the invoice early does not pull the VAT forward under cash accounting the way it does under standard accounting.
If they cancel and you keep the deposit
From 1 March 2019, HMRC's policy on unfulfilled supplies is that VAT remains due on money you retain when the customer does not take up the goods or services. Revenue and Customs Brief 13 (2018) is the named brief. GOV.UK's deposits page repeats it under "Forfeit deposits": if you keep the deposit, VAT remains due on the money you have received. You can only reverse the VAT if you actually refund the deposit.
That is a VAT point, not a Consumer Rights Act point. Fairness of keeping the money is a separate question. Both can be true: you may have to refund a consumer because the term was unfair, and if you had kept it you would have owed VAT on it.
CIS on a deposit: labour only, same as the rest of the job
CIS does not care that the invoice says DEPOSIT. It cares that a contractor is paying a subcontractor for construction operations.
GOV.UK, make deductions and pay subcontractors sets the rates HMRC will have given the contractor on verification:
20% for registered subcontractors
30% for unregistered subcontractors
0% if the subcontractor has gross payment status
The contractor starts with the gross invoice, then takes off VAT, consumable stores, fuel used (not travelling), plant hired for that job, manufacturing or prefabricating materials, and materials the subcontractor paid for directly. What is left is the CIS base. A deposit that is "30% of the whole job" still needs labour and materials split, or a cautious contractor deducts 20% of the lot - including the boiler you have not even collected.
If the deposit is from a homeowner, there is no CIS. An ordinary householder is not a CIS contractor. Do not print a 20% line on a domestic deposit to look professional. They will not know what to pay. The longer scheme explainer is the CIS guide UK 2026. CIS lines on InvoiceAdept sit on Pro+ at £12.99. We print the deduction. We do not file the contractor's CIS300.
Reverse charge on a deposit
If you are VAT-registered, the customer is VAT-registered, the payment is reported within CIS, the services are standard- or reduced-rated, you are not an employment business supplying staff, and they have not given a written end-user notice, you do not charge VAT on the deposit either. They account for it. HMRC's test is how to use the reverse charge if you supply building and construction services. The invoice wording and CIS overlap live on domestic reverse charge invoice UK.
On a supply-and-fix, reverse charge usually sits on the full net value of that construction supply - labour and the materials that come with it. CIS is the opposite: CIS ignores materials. Split the lines so both calculations are visible. Show the VAT the customer must account for. Do not add it to the amount they pay you. Put the words reverse charge on the face of the invoice. HMRC examples include "VAT Act 1994 Section 55A applies" and "Customer to pay the VAT to HMRC".
Private householders are not VAT-registered. Reverse charge never applies to their deposit. Charge VAT if you are registered, at the rate VAT Notice 708 gives for that work.
How to invoice the deposit, then the balance
Two invoices. Two numbers. One job.
1. Quote accepted in writing. Scope, price, deposit percentage, when it is due, refund terms. A voice note is not a contract you want to show a judge.
2. Deposit invoice. Number it. Label it. Due date. Full job value, deposit, balance remaining. If VAT-registered, this invoice (or the payment, if it lands first) is the tax point for the deposit.
3. Take the money before you order the kit. A deposit invoice that sits unpaid while you have already paid the merchant is just an unsecured loan.
4. Do the work. If the job runs long, raise stage invoices as the contract says. Each stage is a new number and a new tax point.
5. Final / balance invoice. Show the full job value, extras they approved, VAT as it applies, the deposit (and any stages) already invoiced, and the amount now due. Do not bury the deposit as a silent reduction of the unit price. Credit it as a line: "Less deposit invoiced INV-2026-0142, 12 March 2026, £2,100.00".
If extras appeared in WhatsApp after the deposit, they belong on the balance invoice (or a variation invoice), not as a rewrite of the deposit.
InvoiceAdept Free is five invoices a month. A kitchen with deposit + first-fix + final already uses three. That is the real cap. Pro at £7.99 removes it and sends the PDF in WhatsApp. Card collection is Stripe's own UK rate; we do not add a platform fee. Compare plans on pricing.
Worked example: kitchen fitting, deposit then balance
A VAT-registered kitchen fitter quotes a homeowner £7,000 net, VAT at 20% £1,400, £8,400 including VAT, for a full installation at 14 Maple Road, Bristol. The quote is accepted. The fitter needs a 25% deposit before ordering the units. These numbers are a worked example, not a quote and not a "typical UK rate".
Deposit invoice (INV-2026-0142)
Line | Amount |
|---|---|
Agreed job value (net) | £7,000.00 |
VAT at 20% on the full job (for information) | £1,400.00 |
Agreed job value (inc. VAT) | £8,400.00 |
Deposit 25% of £8,400 | £2,100.00 |
Of which net | £1,750.00 |
Of which VAT at 20% | £350.00 |
Balance remaining after this invoice | £6,300.00 inc. VAT |
Description: "25% deposit for kitchen supply and installation at 14 Maple Road, Bristol BS3 4QT, as per quote QU-2026-0089. Total project value £8,400.00 including VAT. Balance of £6,300.00 to be invoiced on completion."
Due: on receipt. Refund terms on the quote and repeated in the footer: if they cancel before units are ordered, the deposit is refunded; if units have been ordered and cannot be returned, the cost of those units is deducted from any refund.
You account for £350 output tax in the period of this tax point.
Balance invoice (INV-2026-0188), same job, no extras
Line | Amount |
|---|---|
Kitchen supply and installation, 14 Maple Road, as QU-2026-0089 | £7,000.00 |
VAT at 20% | £1,400.00 |
Gross | £8,400.00 |
Less deposit INV-2026-0142 | -£2,100.00 |
Amount now due | £6,300.00 |
You account for the remaining £1,050 VAT in the period of this second tax point (invoice or payment, whichever is first). Across the two invoices you have accounted for £1,400. That is the point. Do not "put all the VAT on the final".
Same kitchen, billed to a VAT-registered contractor, CIS 20%, reverse charge applies
Labour in the deposit (your time to survey, draw, and place the order): £400 net. Materials in the deposit (deposit you must pay the unit manufacturer): £1,350 net. Deposit net £1,750 as above.
Line | Amount |
|---|---|
Labour (this deposit) | £400.00 |
Materials (this deposit) | £1,350.00 |
Subtotal (VAT-exclusive) | £1,750.00 |
VAT at 20% - reverse charge, customer accounts | £350.00 (not charged) |
CIS deduction (20% on labour £400) | -£80.00 |
Amount the contractor pays you now | £1,670.00 |
Wording: "Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC." The contractor remits £80 CIS against your UTR and accounts for the £350 on their own VAT return. You never hold that VAT. Full reverse-charge walkthrough: domestic reverse charge invoice UK.
If you had put "deposit £1,750" as one line, a cautious contractor deducts 20% of £1,750 and you are light on the units until Self Assessment.
Late payment on a deposit (business customers only)
A deposit invoice is still an invoice. If the customer is another business and they miss the due date, the Late Payment of Commercial Debts (Interest) Act 1998 lets you charge statutory interest at 8% plus the Bank of England base rate, unless your contract already sets a different interest rate. You cannot use a lower rate against a public authority.
On top of interest you can claim a fixed recovery sum once per late payment - GOV.UK, claim debt recovery costs:
Amount of debt | What you can charge |
|---|---|
Up to £999.99 | £40 |
£1,000 to £9,999.99 | £70 |
£10,000 or more | £100 |
If you did not agree a payment date, GOV.UK treats the payment as late 30 days after they received the invoice, or after you delivered the goods or services if that is later. Write the due date. "Pay promptly" is not a date.
This Act is for commercial debts. Homeowners are consumers. Do not paste a Late Payment Act paragraph on a domestic deposit and expect the same machinery. Be specific, send the reminder on the due date, and if they still do not pay that is a small claim - not a blog statistic.
Refund terms that survive a dispute
Write three outcomes on the quote and repeat the short version on the deposit invoice.
They cancel before you have ordered anything or started. A full refund is the fair default for a consumer. You have suffered no loss.
They cancel after you have ordered non-returnable materials, or after work has started. You can retain the cost of those materials and the work done. Say so: "If you cancel after materials have been ordered, the cost of non-returnable materials will be deducted from any refund." Keep the merchant invoices. The CMA's point is that what you keep should track actual loss, not a penalty.
You cannot finish. Refund the deposit minus the value of work actually done. Keeping a deposit for work you did not do is the case you lose.
Business-to-business terms can be stricter if both sides agreed them in writing before payment. They still need to be transparent. A clause you only reveal after the money has landed is not much of a clause.
Mistakes that turn a deposit into a fight
Issuing a deposit invoice with no accepted quote.
Calling it "kitchen installation £2,100" with no DEPOSIT label and no balance figure.
Asking for most of the price up front on a small job where your only cost is a morning's labour.
No refund terms, then spending the money, then being asked for it back.
VAT-registered and treating the deposit as "VAT later, when we finish".
CIS deposit with labour and materials in one lump.
Reverse-charge wording on a homeowner deposit, or charging VAT to a VAT-registered contractor when reverse charge applies.
Reusing the deposit invoice number on the final bill.
Waiting until Sunday to invoice a deposit you took on Tuesday. If you are VAT-registered, receipt was already the tax point.
Assuming InvoiceAdept files the VAT return, CIS300, or MTD. It does not.
How InvoiceAdept actually fits
Free: five invoices a month, no card required. Enough to see the template. A three-invoice kitchen will use three of those five.
Pro at £7.99: unlimited invoices, WhatsApp send, Stripe card payments with no extra InvoiceAdept platform fee, reminders, quotes.
Pro+: £12.99. CIS on the invoice. Still does not file CIS300.
Full current prices: invoiceadept.com/pricing. Raise the first deposit in the free invoice generator - label it DEPOSIT, show the balance remaining, then invoice the rest under a new number.
Frequently asked questions
Is there a legal maximum deposit I can charge in the UK?
No. UK law does not set a maximum percentage. For consumers, the Consumer Rights Act 2015 and the CMA's deposits guidance require the amount and the cancellation terms to be fair and to track genuine costs or a small reservation fee. An 80% "non-refundable" deposit on a job with little upfront cost is the one that gets challenged.
Can I make a deposit non-refundable?
Not as a blanket consumer term. You can retain amounts that reflect loss you have actually incurred. For business customers, a written term you both agreed can be stricter, but it still has to be clear before they pay. See the CMA deposits guide.
Do I charge VAT on a deposit?
If you are VAT-registered, yes - unless reverse charge applies, in which case you show the VAT and the customer accounts for it. The tax point is the invoice date or the date you receive the money, whichever is first. GOV.UK, VAT on deposits.
Does CIS apply to a deposit?
Only when a contractor is paying you for construction operations. CIS is on labour after materials and VAT come off. A homeowner deposit has no CIS. Rates: 20% registered, 30% unregistered, 0% gross payment status - GOV.UK CIS deductions.
How do I invoice the balance after a deposit?
New invoice, new number. Full job value, extras, VAT as it applies, less the deposit (quote the deposit invoice number), amount now due. Each payment or VAT invoice is its own tax point.
What if a business customer pays the deposit late?
Statutory interest at 8% plus Bank of England Bank Rate (3.75% held 30 July 2026 -> 11.75% statutory while that rate applies; next MPC 17 September 2026), and £40 / £70 / £100 recovery costs depending on the debt, unless your contract sets a different interest rate. Charging interest. Not the same rules as a consumer.
Does InvoiceAdept file CIS300 or Making Tax Digital?
No. We raise the invoice and store the record. Pro+ prints CIS. Filing the monthly CIS return and MTD updates is HMRC or software on HMRC's list.
About this guide
InvoiceAdept is invoicing software for UK trades, operated by Tech Me Today Ltd, Companies House 15917255, ICO registration ZB944663. We raise invoices, including CIS on Pro+. We do not file your CIS300, your VAT return, or your Making Tax Digital updates to HMRC.
Last reviewed: 11 September 2026. Tax and consumer-law rules change. Check the GOV.UK pages linked above before you rely on a rate or a form of words.
This guide is general information for UK tradespeople. It is not tax, legal or accounting advice.
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