Deposit invoice template UK: how to request upfront payments properly

Around 62% of UK invoices get paid late. For tradespeople, that figure feels generous. If you have ever started a kitchen fit-out, ordered materials worth thousands, then waited 60 days for payment, you already know the problem. Deposit invoices fix this. They get cash in your account before you lift a tool, and they protect both you and the customer.

What is a deposit invoice?

A deposit invoice is an invoice you send before starting work. It asks the customer to pay a portion of the total job cost upfront. Not a quote. Not an estimate. A formal request for payment with a specific amount due by a specific date.

The remaining balance gets invoiced separately, either as a single final invoice or as staged payments throughout the job. Electricians rewiring a house might invoice in three stages. A plumber replacing a boiler might take one deposit and one final payment. The structure depends on the size and duration of the job.

Deposit invoices are standard practice across UK trades. Builders, kitchen fitters, landscapers, bathroom installers, plasterers working on larger jobs, they all use them. They weed out timewasters, cover your upfront material costs, and give you working capital from day one.

What percentage should you charge?

There is no law in the UK that sets a maximum deposit percentage. You can technically charge whatever you want. But the Consumer Rights Act 2015 requires that deposits are proportionate to the trader's actual losses if the customer cancels. Ask for 80% upfront on a small job and you will struggle to justify it if a dispute arises.

Here is what works in practice across different trades:

The logic is simple. If you are buying expensive, non-returnable materials specific to that job, a higher deposit is justified. If the work is mostly labour, keep the deposit lower and bill more frequently instead.

Deposit vs stage payments

For jobs lasting more than two weeks, stage payments usually work better than a single deposit plus final invoice. A builder working on a house extension might structure payments like this:

• 10% deposit on signing
• 25% at foundation completion
• 25% at roof level
• 25% at first fix (electrics and plumbing)
• 15% on final completion and sign-off

This keeps cash flowing throughout the project and reduces the risk of a large outstanding balance at the end. Each stage payment gets its own invoice.

What to include on a deposit invoice

A deposit invoice needs everything a standard invoice needs, plus a few extras. According to HMRC's invoicing rules, every invoice must include:

On top of these, your deposit invoice should also include:

• The total agreed job value, meaning the full contract price before any deposit
• The deposit amount you are requesting, shown as both a value and percentage
• The balance remaining after the deposit
• A clear "DEPOSIT INVOICE" label so nobody confuses it with the final bill
• Refund terms covering what happens if the customer cancels before work starts
• A reference to the quote or contract, linking the deposit to the agreed scope of work

You can create deposit invoices in seconds using our free invoice generator. Add the full job value in the description, set the invoice total to the deposit amount, and note the balance in the footer.

Getting the refund terms right

This is where most tradespeople get it wrong. They take a deposit but never state what happens if the job falls through. Then six months later, a customer demands a full refund and the money is already spent on materials.

Your deposit terms should cover three scenarios:

Customer cancels before work starts

If no materials have been ordered and no work has been done, a full refund is reasonable. If you have already ordered bespoke or non-returnable materials, you should retain the cost of those materials. State this clearly: "If cancellation occurs after materials have been ordered, the cost of non-returnable materials will be deducted from any refund."

Customer cancels during the job

You are entitled to payment for work completed plus materials used. The deposit should be applied against this amount. Any excess is refunded; any shortfall is invoiced separately.

You cannot complete the work

If you cancel or cannot finish, the customer is entitled to a refund of the deposit minus the fair value of any work completed. Do not try to retain deposits for work you have not done. The Consumer Rights Act 2015 is clear on this, and you will lose any county court claim.

VAT on deposit invoices

If you are VAT registered, the deposit payment creates a tax point. You must account for VAT on the deposit in the VAT period you receive payment, not when the job is completed. This catches people out.

Say you take a £3,000 deposit (including VAT) in March for a job starting in May. The £500 VAT element goes on your March VAT return, not May. Use our VAT calculator to work out the split.

The final invoice should show the total job value, the deposit already paid, and the remaining balance with VAT calculated on the full amount.

Worked example

Say you are a kitchen fitter quoting £8,400 including VAT for a full kitchen installation. You want a 25% deposit.

Your deposit invoice shows £2,100.00 due. The description reads: "25% deposit for kitchen installation at 14 Maple Road, Bristol BS3 4QT, as per quote QU-2024-0089. Total project value £8,400.00 inc. VAT. Balance of £6,300.00 due on completion." Clear. Professional. No room for confusion.

Common mistakes with deposit invoices

After looking at thousands of invoices from UK tradespeople, these mistakes come up again and again:

Sending a deposit invoice without an accepted quote or contract is the biggest one. If the scope is not agreed in writing, you have no basis for the deposit. Closely related: missing refund terms. The deposit terms should be on the invoice or the accompanying quote. Not in your head.

Another common problem is invoices that just say "£2,100 for kitchen installation" without mentioning it is a deposit. The customer could argue they have paid in full. Always label it clearly.

Then there is the follow-up problem. Sending a deposit invoice and just... waiting. Set a clear due date (7 days is standard for deposits) and follow up on day 8. Better yet, set up automatic reminders.

Finally, asking for 50% upfront on a £200 job looks unprofessional. For anything under £500, consider just invoicing on completion with short payment terms.

The legal position on trade deposits in the UK

UK law treats deposits differently depending on whether your customer is a consumer or a business.

For consumer customers, the Consumer Rights Act 2015 applies. Deposit terms must be fair and transparent. An unfair term, like "deposits are non-refundable under any circumstances," can be struck out by a court. The Competition and Markets Authority guidance says deposits should be proportionate to actual losses.

For business customers, you have more flexibility. Business-to-business deposits are governed by whatever terms both parties agree to. You have more room to set strict non-refundable conditions, though they still need to be reasonable.

In both cases, the best protection is a clear written agreement. A quote accepted in writing, followed by a deposit invoice with explicit terms. If it ever goes to small claims court, the judge looks at what was agreed, not what either party assumed.

Frequently asked questions

Stop chasing deposits manually. InvoiceAdept's free invoice generator lets you create professional deposit invoices in under a minute, with automatic payment reminders that chase the money so you do not have to. See how it works.