Invoice vs receipt:
what is the difference?

Invoices and receipts look alike, travel together and are often confused, but they do opposite jobs. An invoice says "please pay this". A receipt says "this has been paid". Getting the difference right matters for your customers, for your records and, if you are VAT registered, for whether VAT can be reclaimed.

The difference in one table

Details an invoice needs compared with a basic receipt

• Invoice, every business9 required details
• Full VAT invoiceabout 12 details
• Simplified VAT invoiceabout 6 details
• Basic receiptabout 5 details

When you issue an invoice

You send an invoice when you have supplied goods or services and want to be paid, or at agreed points such as a deposit or a stage payment. Between VAT-registered businesses, GOV.UK says you need to give an invoice by law. For everyone else, an invoice is how you tell a customer what they owe, by when, and how to pay. Every invoice needs the standard details: a unique number, your details, the customer's details, a description, the supply date, the invoice date, the amounts, any VAT and the total. The guide on what a UK invoice must include has the full checklist.

When you issue a receipt

A receipt follows payment. Shops give receipts at the till; service businesses often send one when a customer pays, especially for cash payments or when the customer asks. There is no fixed legal list of what a receipt must show, but a useful one includes:

• your business name
• the date of payment
• the amount paid
• what the payment was for, ideally the invoice number
• how it was paid: cash, card or bank transfer

For cash payments in particular, a receipt protects both sides: the customer has proof they paid, and you have a record of cash you must include in your income.

When a receipt is also an invoice

In retail, the till receipt is often a simplified VAT invoice as well as a receipt. A VAT-registered business can issue one for a supply of £250 or less if the customer agrees, showing the seller's name, address and VAT number, the time of supply, a description, and for each VAT rate the total including VAT and the rate. That one slip then both proves payment and lets a VAT-registered buyer reclaim the VAT.

When an invoice becomes a receipt

Many service businesses turn an invoice into a receipt by marking it paid: "Paid in full on 14 April by bank transfer, thank you." Sending that back to the customer gives them proof of payment without a separate document. Keep your original invoice in your records unchanged, and note the payment against it.

Which one HMRC needs

For your own tax return, you need records of all your income and expenses. Your sales invoices are the main record of income; for cash sales without invoices, your receipts and till records do the job. For expenses, keep the supplier's invoice or receipt.

If you are VAT registered and want to reclaim VAT on a purchase, the document matters more. You generally need a VAT invoice from the supplier, or a simplified VAT invoice for a supply of £250 or less. A card machine slip that shows only the amount paid, or a bank statement line, is not a VAT invoice on its own.

Receipts you receive

Receipts for things you buy for the business are evidence of your expenses. Keep them, even small ones: fuel, parking, materials, stationery. Photograph or scan paper receipts, because thermal till paper fades within months. Keep records for at least 5 years after the 31 January filing deadline as a sole trader, or 6 years for VAT records. The guide on how long to keep invoices has the detail.

Related documents

Invoices and receipts sit in a family of business documents, each with its own job:

The guide on invoice vs bill covers another common pair of terms, and proforma vs invoice explains when an advance bill is the right choice.

How different businesses use each

The balance between invoices and receipts depends on how your customers pay.

Shops, market stalls and cafés mostly take payment at the point of sale, so receipts, often till receipts, are their main document. Invoices appear only for business customers on account.

Trades and home services usually do the work, then invoice. A receipt follows when a household customer pays cash or asks for proof of payment.

Consultants and freelancers invoice almost everything, often on 14 or 30-day terms, and rarely issue separate receipts, because a business customer's own records show the payment.

Online sellers usually send an order confirmation that doubles as a receipt, and invoices for business buyers who need them for their records or VAT.

Whatever the pattern, the principle is the same: the document that records the sale must record it accurately and consistently, because it becomes your record of income.

Mistakes that cause problems

• Calling a receipt an invoice. A customer's accounts team may try to pay it again, or file it as outstanding.
• Showing VAT on a receipt when you are not VAT registered. Only registered businesses can charge VAT; see invoicing without a VAT number.
• Not recording cash sales. A cash payment with no receipt and no record is income missing from your books.
• Keeping only the card slip for purchases. For VAT reclaims you need the supplier's VAT invoice.
• Editing a sent invoice to show it as paid. Keep the original unchanged and record the payment against it, or send a separate receipt.

A worked example

A dog groomer charges £45 for a full groom. For a regular customer who pays by bank transfer, she sends an invoice after the appointment, due within 7 days. When the payment arrives, she marks the invoice paid in her records. For a walk-in customer who pays cash on the spot, she gives a handwritten receipt showing the date, the service, £45 and "paid in cash", and keeps a copy. She is not VAT registered, so neither document shows VAT. Both kinds of payment go into her income for the year.

Digital receipts and your records

More receipts now arrive by email than on paper, and more invoices are sent as PDFs than posted. Digital copies are fine for your records as long as they are complete and readable; save them somewhere you will find them again, organised by tax year, rather than leaving them in an inbox. If you are within Making Tax Digital, your records must be kept digitally in compatible software anyway, so keeping invoices and receipts there together saves a step. And from April 2029, VAT invoices between businesses will move to e-invoicing, where the invoice itself is structured data; the e-invoicing hub explains what that means.

Common questions

Do I have to give a receipt if a customer asks? It is good practice and customers commonly expect one, particularly for cash. For most small businesses there is no reason not to.

Should receipts be numbered? It is not required, but a simple sequence, such as REC-0001 onwards, makes receipts easy to find and match to your cash records.

Is a bank transfer confirmation a receipt? It shows money moved, which is evidence of payment. It does not describe what was bought, so keep it with the invoice it paid.

Can one document be both an invoice and a receipt? Yes: a paid invoice marked as such, or a retailer's till receipt that meets the simplified VAT invoice rules.

What if I lose a receipt for a business expense? Record what you can: date, supplier, amount and what it was for, with the bank or card statement line. For VAT, a missing VAT invoice may mean you cannot reclaim the VAT, so ask the supplier for a copy.

The short version

Send an invoice to ask for money; give a receipt when you get it. Keep both. And when VAT is involved, make sure the document you keep from a supplier is a proper VAT invoice, so the VAT can be reclaimed. The VAT calculator shows the VAT inside any total, and the invoice number generator gives your invoices and receipts clear, separate reference numbers.