How to create a private invoice using a template

As a private in­di­vidu­al, writing an invoice may become necessary in many situ­ations—whether after selling a used item or for a one-time service. In this article, you will learn step by step how to create a proper private invoice and what to consider. We’ve also included a practical Word template for download.

What is a private invoice?

In the UK, private in­di­vidu­als can issue invoices in certain situ­ations. If you sell a used personal item, provide a non-pro­fes­sion­al service, or conduct a financial trans­ac­tion where the buyer requests a receipt, you may need to create a private invoice. Busi­nesses may also request invoices when pur­chas­ing goods or services from private in­di­vidu­als.

However, it is important to un­der­stand when issuing an invoice might have tax or legal con­sequences. HM Revenue & Customs (HMRC) may classify your trans­ac­tions as business activity rather than private sales if:

• You regularly sell items for profit.
• You buy items with the intention of reselling them.
• You make goods to sell.
• You provide services in a self-employed capacity.

If your sales are deemed a business, you may need to register as self-employed and report your income for tax purposes.

What are the tax reg­u­la­tions for private invoices?

Private in­di­vidu­als can issue invoices, but tax ob­lig­a­tions depend on the nature and frequency of trans­ac­tions.

Oc­ca­sion­al private sales (non-taxable)

• Selling used personal items for less than their original purchase price is not subject to tax.
• There is no re­quire­ment to charge VAT or report income if selling in­fre­quently and not for profit.
• Examples: Selling a second-hand phone, used clothes, or old furniture.

Selling for profit (taxable)

• If you sell an item for more than you ori­gin­ally paid, you may be liable for Capital Gains Tax (CGT). This typically applies to valuable assets like antiques, art, or property.
• There is a Capital Gains Tax allowance (£6,000 for 2023/24), meaning CGT is only payable if your total gains exceed this threshold.

Frequent sales = business

If you regularly sell goods or services for profit, HM Revenue & Customs (HMRC) may classify you as a business, requiring:

• Self-as­sess­ment tax return filing (declaring income and expenses).
• Income tax payment on profits.
• VAT re­gis­tra­tion if your total sales exceed £90,000 per year (2024 threshold).

Income reporting for services

• If you provide services as a private in­di­vidu­al (e.g., tutoring, freel­an­cing), you must report income if it exceeds £1,000 per tax year (HMRC’s trading allowance).
• If your earnings exceed this amount, you may need to register as self-employed and file a Self-As­sess­ment tax return.

Online selling & HMRC reporting

• Online platforms like eBay, Etsy, PayPal, and Vinted may report high-value trans­ac­tions to HMRC.
• If you regularly sell items online for profit, you may be con­sidered a trader, requiring tax re­gis­tra­tion.

When should you, as a private person, issue an invoice?

If you are providing goods or services as a private in­di­vidu­al, you can issue an invoice to another private person or even a business. There are no strict legal re­quire­ments for private invoices, but they can serve as proof of payment and clarify the terms of a trans­ac­tion.

What should a private invoice include?

While there are no formal rules, a well-struc­tured invoice should contain the following:

• Your name and address (issuer)
• Buyer’s name and address (recipient)
• Invoice date and location
• Reason for the invoice (e.g., sale of goods, service rendered)
• Detailed list of goods/services provided, including date of delivery/service and quantity, de­scrip­tion, unit price, and total price
• Total amount due
• Payment terms (e.g., ‘Due im­me­di­ately’ or ‘Payable within 10 days’)
• Payment method and details (if necessary, include bank details or preferred payment method)

A polite closing, such as a greeting or a thank-you note, can add a pro­fes­sion­al touch.

Other details of the legal trans­ac­tion can also be included on the private invoice. If, for example, a used item being sold has a known defect, it is worth noting that on the private invoice.

‘As pre­vi­ously discussed, the phone’s display screen has a few small scratches on the top left’.

What should NOT be included on a private invoice?

• VAT (Value-Added Tax) – Private in­di­vidu­als do not charge VAT unless they are VAT-re­gistered busi­nesses (threshold: £90,000/year as of 2024).
• Business details: Do not include a business name, tax ID, or VAT number unless you are of­fi­cially re­gistered as a business.

To avoid mis­un­der­stand­ings, you may want to include a note such as: ‘This invoice is for a private trans­ac­tion and does not include sales tax’.

When does a private sale become a business?

Oc­ca­sion­al private sales are not taxable in the UK, but if you regularly sell goods or services for profit, HM Revenue & Customs (HMRC) may classify you as a business, requiring you to register for tax purposes.

If you fre­quently sell items, buy goods with the intent to resell, make products to sell, or provide paid services such as tutoring or graphic design, HMRC may consider you a trader. Actively marketing your products or main­tain­ing an online store on platforms like eBay, Etsy, or Facebook Mar­ket­place can also indicate business activity.

If your total earnings from sales or services exceed £1,000 per year, you must register as self-employed with HMRC and report your income. If your total self-em­ploy­ment earnings exceed £12,570 per year, you must file a Self-As­sess­ment tax return and pay Income Tax and National Insurance. If your annual sales are more than £90,000, you must register for VAT and charge VAT on taxable goods or services.

Oc­ca­sion­al private sales, such as selling second-hand personal items for less than their original price, are not clas­si­fied as business activity and do not need to be reported. However, if you regularly sell for profit, you may need to register and comply with tax ob­lig­a­tions.

Private invoice template to download

Whether using a text editor or invoicing software, issuing an invoice as a private in­di­vidu­al is quick and easy. Make sure to include all essential details and add any necessary notes, such as a de­scrip­tion of the invoiced item, at the end of the document. Keep a copy of the invoice—either digitally or on paper—for future reference, for example, when filing your tax return.

Please note the legal dis­claim­er for this article.