Proforma invoice vs tax invoice: what UK tradespeople need to know

If you've been in the trades long enough, you've probably had a customer ask for a proforma invoice before you start a job. Maybe a property manager needs one for budget approval, or a commercial client wants written costs before signing off. But here's where it gets confusing: is a proforma the same as a regular invoice? Can HMRC treat it as taxable income? And what exactly makes a tax invoice different?

These are questions that trip up a lot of self-employed tradespeople. Getting it wrong can mean chasing payments with the wrong paperwork, or worse, running into problems with your VAT returns. Let me break it down clearly.

What is a proforma invoice?

A proforma invoice is essentially a quote dressed up as an invoice. It looks like an invoice, has similar details, but it's issued before the work is done or goods are delivered. Think of it as a formal estimate.

When you'd use a proforma invoice

There are a few common situations where proforma invoices make sense for tradespeople:

• Commercial jobs: A facilities manager at an office block needs a formal document to get budget approval before you can start rewiring.
• New clients: You don't know them yet and want something more official than a text message quote. A proforma sets expectations in writing.
• Deposits: You want to request a deposit before ordering materials. A proforma lets you outline the deposit amount alongside the full project cost.
• Export work: If you're supplying materials or equipment abroad, customs may require a proforma invoice for clearance.

What to include on a proforma invoice

Even though it's not a formal tax document, your proforma should still look professional. Include:

• Your business name and contact details
• The customer's name and address
• A clear description of the work or materials
• Itemised costs and the total
• The word "PROFORMA" clearly marked at the top
• An estimated timeline or validity period (e.g., "valid for 30 days")

You can create professional proforma invoices in seconds with a tool like InvoiceAdept's free invoice generator. Just mark it as a proforma before sending.

The legal status of proforma invoices

Here's the important bit. A proforma invoice is not a legally binding demand for payment. It doesn't create an obligation for the customer to pay, and it doesn't count as evidence of a completed sale. HMRC does not recognise proforma invoices for VAT purposes. You cannot use a proforma to reclaim input VAT, and you shouldn't include proforma amounts in your VAT return.

If a customer pays based on a proforma, you should still issue a proper invoice (or VAT invoice, if registered) to confirm the transaction.

What is a tax invoice (VAT invoice)?

A tax invoice, commonly called a VAT invoice in the UK, is a formal document that VAT-registered businesses must issue when they supply goods or services to another VAT-registered business. It's a legal requirement under HMRC's VAT invoicing rules.

When you must issue a VAT invoice

If you're VAT-registered (your taxable turnover exceeds the VAT threshold of £90,000 or you've voluntarily registered), you must issue a VAT invoice whenever you:

• Supply goods or services to another VAT-registered business
• Receive a request for a VAT invoice from any customer

You must issue the invoice within 30 days of the date of supply or the date of payment, whichever comes first.

What must be on a VAT invoice

HMRC is quite specific about what a VAT invoice needs. For a full VAT invoice (supplies over £250), you must include:

For supplies under £250, you can issue a simplified VAT invoice with fewer details. And for retail transactions under £250, even less is required.

Key differences between proforma and tax invoices

Let me put this side by side so you can see exactly where they differ:

Common mistakes tradespeople make

In my experience working with hundreds of self-employed tradespeople, these are the mistakes that come up again and again:

Using a proforma as your only invoice

Some tradespeople send a proforma before the job, the client pays from it, and no further invoice is ever issued. This is a problem. If you're VAT-registered, you haven't issued a valid VAT invoice. And even if you're not VAT-registered, you don't have a proper record of the sale for your self-assessment tax return.

Always follow up a proforma with a proper invoice once the work is done and payment is due.

Numbering proformas in the same sequence as invoices

Your invoice numbers need to be sequential with no gaps. If you number proformas as INV-001, INV-002, and then your actual invoices start at INV-003, you'll have a messy audit trail. Use a separate prefix like PF-001 or PRO-001 for proformas.

Not marking it clearly as a proforma

If your proforma looks identical to a regular invoice, a customer might assume they've already been invoiced and delay the real payment. Or worse, they might try to use it as a VAT invoice for their own records. Always stamp "PROFORMA" prominently at the top.

Issuing VAT invoices when you're not VAT-registered

This is a serious one. If you're not registered for VAT, you cannot charge VAT or issue VAT invoices. Doing so is an offence. Your invoices should show the total amount without any VAT breakdown. If a customer insists on a VAT invoice, explain that you're not VAT-registered and the price is VAT-exclusive.

Practical workflow for UK tradespeople

Here's how I'd suggest handling it in practice:

1. Quote stage: Send a proforma invoice or formal quote outlining the work and expected costs. Mark it clearly as a proforma.
2. Deposit: If you need a deposit, reference the proforma number and request partial payment. Issue a receipt or deposit invoice.
3. Job completion: Once the work is done, issue a proper invoice (or VAT invoice if registered). Reference the original proforma number so the client can match them up.
4. Payment chasing: If the client doesn't pay, you chase using the proper invoice, not the proforma. The invoice is your legal document.

Using invoicing software like InvoiceAdept makes this workflow straightforward. You can convert a proforma to a proper invoice with one click, keeping all the details consistent.

What if you're not VAT-registered?

If your turnover is below the £90,000 VAT threshold and you haven't voluntarily registered, you don't need to issue VAT invoices. But you still need to issue regular invoices for your records and your customer's records.

Your invoices should include:

• Your name and business name
• Your address and contact details
• The customer's details
• A unique invoice number
• The date
• A description of the work
• The total amount due
• Payment terms and methods

You should not include a VAT number or any VAT breakdown. If you're approaching the threshold, check our guide on when to register for VAT in 2026.

Not sure how much you owe for the year? Our self-assessment tax calculator can give you a quick estimate.

Frequently asked questions

Wrapping up

The difference between a proforma and a tax invoice isn't complicated once you understand it. A proforma is your "here's what it'll cost" document. A tax invoice is your "here's what you owe" document. Use proformas for quoting and deposits, then always follow up with a proper invoice once the work is complete.

If you're looking for an easy way to manage both, InvoiceAdept lets you create professional proforma invoices and convert them to proper invoices (including VAT invoices) with a single click. It's free to start and built specifically for UK tradespeople. You can also use our free invoice generator to create your first invoice in under 60 seconds.