IT consultant invoice template

How do IT consultants usually invoice?

IT consultants invoice monthly against a statement of work for day-rate engagements and fixed fees for defined deliverables such as audits and migration plans, on 30 day terms with the client's PO number. Software licences and cloud costs procured for the client are recharged at cost on separate lines or, better, billed to the client directly by the vendor. Larger clients may require inside-IR35 arrangements that affect how the invoice is paid.

IT consultants in this example give the customer 30 days to pay. Hourly rates run from £70 to £160. A full day is typically £500 to £1,100.

What should a IT consultant put on an invoice?

Beyond the legal basics, IT consultants should:

• Quote the SOW reference and list days with dates or the deliverable accepted.
• Recharge licences and cloud costs at cost with the vendor invoice available, or have the vendor bill the client.
• Separate advisory days from implementation days if the rates differ.
• Keep the IR35 determination with the contract; it changes whether you are paid gross.

Every UK invoice, whatever the trade, must also show:

• a unique, sequential invoice number
• your business name and address (and company number if you trade as a limited company)
• the client’s name and address
• the invoice date and, for VAT invoices, the date of supply if different
• a clear description of each item of work or goods
• the amount due and when it must be paid
• your VAT number, the VAT rate per line and the VAT total, if you are VAT registered

Do IT consultants charge VAT?

You only charge VAT once registered, which is compulsory when taxable turnover passes £90,000 in any rolling 12 months. Below that, show no VAT line and no VAT number. Once registered, digital and IT services are standard rated at 20% for UK clients; services to business clients outside the UK are generally outside the scope of UK VAT, so note that on the invoice and charge none.

On the Flat Rate Scheme the sector for IT consultants is usually “Computer and IT consultancy or data processing” at 14.5% of VAT-inclusive turnover, with a 1% discount in the first year of registration. If you spend little on goods you may be a limited cost trader and have to use 16.5% instead. The scheme suits businesses with few VAT-able costs; check it against the standard method with the VAT calculator before joining.