Deposit invoices for trades jobs
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A deposit invoice asks for money you've agreed to take before the job's done. Name the job and the amount, say what the deposit pays for and repeat the terms you agreed. If you're VAT registered, VAT can be due before you finish. Take the deposit off the final bill once, and only once.
Agree what it's for first
Sit down with the customer and agree what the deposit covers, say ordering the kitchen units or holding a fortnight in your diary. Write down the amount or percentage, when it's due and how you'll work out the balance. There's no single deposit percentage for every UK trade, so don't pretend there is.
The request should name the quote or contract and both of you. An invoice isn't a receipt, so only mark it paid when the money's in the bank.
What the deposit invoice should show
- Its own invoice number, and the job or quote reference.
- Your details and the customer's: names, addresses and contact details.
- What the deposit is towards, and the relevant dates.
- The amount before VAT, the VAT and the amount you're asking for, if VAT applies.
- How to pay, and how the deposit comes off the balance.
- A pointer to the cancellation and refund terms you agreed, not a blanket "non-refundable".
VAT can be due before you finish
HMRC says an advance payment towards a specific taxable job generally creates a tax point at the earlier of issuing a VAT invoice or getting the money. The balance can create another one later. So don't assume VAT only kicks in when you finish.
A true security deposit that you'll hand back can be different from a part-payment. Calling it "refundable" doesn't settle the VAT on its own. Look at how the deal really works and what HMRC's guidance says. Construction reverse charge and other special schemes have their own rules.
A £1,000 net job with a 30% deposit
Say you're VAT registered, the job is standard-rated at 20% and you've agreed £1,000 net. The 30% deposit is £300 net + £60 VAT = £360. The balance is £700 net + £140 VAT = £840.
The two payments add up to £1,000 net + £200 VAT = £1,200 total. The final invoice takes off the £360 already paid, once. It mustn't ask for £1,200 again on top of the deposit.
Cancelling and refunds
A homeowner's deposit isn't non-refundable just because your invoice says so. CMA guidance says what you keep should generally reflect what you've actually lost, not act as a penalty, and cancellation terms have to be fair. Keep receipts for what you've spent and steer clear of "you lose the lot" wording.
Jobs agreed at the customer's home or at a distance come with their own cancellation and information rules, with some exceptions. The deposits guide covers them. Get advice for your customer's contract and where you work, rather than treating every job the same.
Keep the paperwork together
Keep the deposit invoice, proof of payment and your balance sums in one place. Agree any changes before you send the final invoice. If the job's cancelled or the price changes, issue a corrected invoice or a credit note. Never quietly edit one you've already sent.
Bojit doesn't take payments or deposits, and for a finished job it sends one invoice for the full amount. This guide is about general practice, not a stage-invoicing feature in the app. The free invoice generator can make an ordinary invoice, but it won't track deposits, take them off for you or work out special VAT treatment.
Sources
- HMRC: instalments and deposits
- HMRC: VAT Notice 700, invoice particulars and rounding
- CMA: cancelling goods or services
- GOV.UK: invoice particulars
General guidance for UK tradespeople, not legal or tax advice. The examples use made-up businesses and prices.
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