Do builders need to charge VAT?

Only if your taxable turnover exceeds £90,000 in any 12-month rolling period. Below this threshold, VAT registration is optional. If registered, you must add VAT to your invoices and submit VAT returns to HMRC.

What payment terms should builders use?

Most builders use net 14 or net 30. For larger projects, stage payments (e.g. 30/40/30 split) protect your cash flow. Always state your terms clearly on the invoice.

Can builders charge interest on late payments?

Yes. Under the Late Payment of Commercial Debts Act 1998, you can charge 8% plus the Bank of England base rate on overdue commercial invoices, plus a fixed compensation amount.

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Invoicing for Builders: How to Get Paid Faster in 2026

3 March 20262 min read

Why proper invoicing matters for builders

Cash flow is the lifeblood of any building business. Yet many builders still rely on handwritten invoices, text messages, or worse — verbal agreements. This leads to late payments, disputes, and hours wasted chasing money instead of being on site.

In this guide, we cover everything you need to know about invoicing as a UK builder in 2026, including what to include on your invoices, how to set payment terms, and how to handle CIS deductions correctly.

What every builder's invoice should include

A professional invoice should contain:

Your business name, address, and contact details
Your customer's name and address
A unique, sequential invoice number (use our invoice number generator if you need help)
The date of the invoice and the due date
A clear breakdown of work done — labour, materials, and any extras
The total amount due, including VAT if you are registered (check with our VAT calculator)
Your payment terms (generate professional terms with our payment terms generator)
Your bank details or a payment link

Setting the right payment terms

Most builders use net 14 or net 30 payment terms. For larger projects, consider asking for stage payments — for example, 30% upfront, 40% at first fix, and 30% on completion.

Whatever terms you choose, make sure they are written clearly on every invoice. You can use our payment terms generator to create professional terms text in seconds.

CIS deductions for builders

If you work as a subcontractor in the construction industry, your contractor may need to deduct CIS from your payments. The standard deduction rate is 20% for registered subcontractors, or 30% if you are not registered.

Your invoice should show the gross amount, the CIS deduction, and the net payment. Use our CIS deduction calculator to work out the exact figures.

Learn more about CIS invoicing in our CIS invoices feature guide.

Handling late payments

Late payment is one of the biggest problems facing UK builders. Under the Late Payment of Commercial Debts (Interest) Act 1998, you are entitled to charge interest on overdue commercial invoices at 8% plus the Bank of England base rate.

You can also claim fixed compensation: £40 for debts up to £999.99, £70 for debts up to £9,999.99, and £100 for debts of £10,000 or more. Use our late payment calculator to work out exactly what you can claim.

Better yet, set up automatic payment reminders so invoices never slip through the cracks.

Making Tax Digital for builders

From April 2026, self-employed builders earning over £50,000 will need to keep digital records and submit quarterly updates to HMRC under Making Tax Digital for Income Tax. InvoiceAdept keeps all your records digital and MTD-compliant automatically.

Read our detailed guide: Making Tax Digital explained (the rules apply to all trades, not just plumbers).

Start invoicing professionally today

Try InvoiceAdept free — create professional invoices in under 60 seconds, accept card payments, and let automatic reminders chase the money for you. Find builders across the UK in our trade directory.