UK credit note
UK Credit Note Template, VAT-compliant refunds and corrections
Issue a credit note whenever you refund a customer, correct an overcharge or accept a return. HMRC-compliant with VAT breakdown and a reference to the original invoice.
- Document title clearly marked Credit Note
- Credit note number and date
- Reference to original invoice number and date
- Your business, VAT number and address
- Customer name and address
- Reason for the credit note
- Net amount credited, VAT credited and gross total in £
When must I issue a credit note?
Whenever you reduce a previously invoiced amount: returns, refunds, discounts given after invoicing, or errors on the original invoice.
Does a credit note reverse VAT?
Yes. The VAT credited reduces your output VAT for the period in which the credit note is issued, and the customer must reduce their input VAT accordingly.
Can a credit note be for more than the original invoice?
No. A credit note can only reduce or fully reverse the original invoice value.
Do I need the customer's agreement?
For refunds and corrections, yes. Best practice is to send the credit note with the reason clearly stated.