Software developer invoice template

How do software developers usually invoice?

Software developers on contract invoice monthly in arrears from an approved timesheet, usually through a limited company to an agency or directly to the client, with the contract reference and the days worked on the invoice and 30 day terms, sometimes shortened to 7 or 14 by agencies with factoring. IR35 status decides whether the invoice is paid gross or net of tax. Fixed-price product work is invoiced per milestone with a deposit.

Software developers in this example give the customer 30 days to pay. Hourly rates run from £55 to £120. A full day is typically £450 to £900.

What should a software developer put on an invoice?

Beyond the legal basics, software developers should:

• Attach or reference the approved timesheet and the contract or agency reference.
• State the number of days and the rate; agencies reconcile against the timesheet portal.
• Keep the IR35 status determination with your contract; inside-IR35 invoices are paid net.
• Invoice on the last working day of the month so the agency's payment run picks it up.

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 software developers 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 software developers 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.