Invoicing overseas clients from the UK: VAT and currency

Working for clients in the US, the EU or further afield is common for UK freelancers and small firms. The invoice looks much like a UK one, but three questions come up every time: do you charge UK VAT, what should the invoice say when you don't, and how do you handle a foreign currency?

This guide answers those for VAT-registered businesses — services to business clients abroad, goods you export, and invoices in dollars or euros — and explains how to show VAT in sterling. The free invoice generator applies the right treatment when you pick the supply type.

The short version

The details below explain each row.

Services to a business client abroad

When you supply services to a business customer outside the UK, the general rule is that the supply is outside the scope of UK VAT. You don't charge UK VAT; the customer accounts for any VAT due in their own country. HMRC's VAT Notice 741A covers where services are supplied, and some services have their own rules, so check it if your work is tied to something in the UK.

Get the customer's VAT number. It's the best evidence that your customer is in business, and it goes on the invoice. Keep it, along with anything else that shows the customer is a business abroad, with your records.

Wording. The UK doesn't prescribe a form of words. A common note is "Outside the scope of UK VAT — reverse charge". Invoice Native prints: "Outside the scope of UK VAT — reverse charge: the customer accounts for any VAT due in their country."

Consumers abroad are different. If your client is a private individual rather than a business, the rules can change, so check before you leave VAT off.

On your VAT return, the net value of these sales still goes in box 6 (total sales), even though there's no VAT on them.

Goods you export

Goods you send to a customer outside the UK are generally zero-rated exports: VAT is charged at 0%. Show the lines as zero-rated, and add a note such as "Zero-rated export of goods". Keep evidence of the export with your records.

Selling goods from Northern Ireland to the EU has its own rules (with XI VAT numbers). Invoice Native doesn't handle that case yet.

In Invoice Native, choose the supply type Services to a business outside the UK or Goods exported outside the UK, and every line switches to outside the scope or zero-rated, with the wording near the totals.

Invoicing in dollars, euros or another currency

Many overseas clients want to pay in their own currency. You can invoice in USD, EUR or another currency — the line amounts can be in any currency — but on a VAT invoice the total VAT must also be in sterling. HMRC accepts these exchange rates:

• the UK market selling rate at the time of supply;
• HMRC's period rates, published for each month;
• any other rate HMRC has approved.

Sticking to one method keeps your records easy to follow.

Example

Say a client asks to be billed in dollars for work that carries 20% VAT. The invoice is $1,000.00 plus $200.00 VAT, $1,200.00 in total. At 1 USD = 0.7412 GBP, the sterling figures are:

In Invoice Native you set the currency and enter the rate as pounds per unit. The VAT summary then adds: "Exchange rate: 1 USD = 0.7412 GBP · VAT £148.24 · Total £889.44".

When the supply is outside the scope or zero-rated, there's no VAT to convert, but the sterling value is still useful for your records and your VAT return.

Getting paid from abroad

Payers abroad usually need more than a sort code and account number:

• IBAN — a UK IBAN starts GB and is 22 characters;
• BIC (SWIFT code) for your bank;
• your account name, exactly as the bank holds it.

Invoice Native's bank transfer block prints the account name, sort code and account number, plus IBAN and BIC when you add them. You can also add a payment link or PayPal.

Payment terms matter more across borders, so state a due date. If your client is a business, you can include a late payment clause — see late payment interest.

Common mistakes

• Charging UK VAT to a business abroad when the supply is outside the scope.
• No customer VAT number or other evidence that the customer is a business.
• A VAT total only in dollars or euros, with no sterling figure.
• No exchange rate on the invoice, so nobody can check the sterling figures.
• Missing IBAN or BIC, which slows down international payments.

Checklist

• ✅ The right supply type: UK customer, services abroad, or exported goods
• ✅ Customer's VAT number for business clients abroad
• ✅ Outside-the-scope or zero-rated wording near the totals
• ✅ Currency chosen, with the VAT total also in sterling
• ✅ IBAN, BIC and exact account name for payers abroad