Download the credit note
One A4 page: the original invoice it's for, why you're crediting the customer, what's being credited, and how the money goes back. Free, no signup, yours to change.
- Excel (.xlsx): type the lines and it adds up the amount credited, with a VAT rate cell (0% unless you're VAT registered).
- Word (.docx): type over the brackets and save a copy for each credit note.
- PDF to print: fill it in by hand.
When you need a credit note
A credit note reduces an invoice you've already sent. You don't delete or change the old invoice: you leave it as it was and issue a credit note against it, so both stay in your records and the numbers still add up.
- You overcharged. A wrong price, a line counted twice, or hours that were less than invoiced.
- Part of the job wasn't done. The customer bought the tiles themselves, or the second coat was dropped.
- You agreed a reduction. A snag took longer to put right and you knocked something off.
- The whole invoice was a mistake. Wrong customer, or sent twice. Credit it in full and send a new one if needed.
If the customer hasn't paid yet, the credit comes off what they owe. If they have, you refund the difference or take it off their next invoice. Say which on the credit note.
What it must show if you're VAT registered
GOV.UK's VAT guide (Notice 700, section 18.2.3) lists what a valid credit note shows:
- its own number and the date you issue it
- your name, address and VAT registration number
- the customer's name and address
- a description of the goods or services being credited
- the quantity and amount for each description
- the total amount credited, excluding VAT
- the rate and amount of VAT credited
- the number and date of the original VAT invoice
It has to reflect a genuine mistake, overcharge or agreed reduction, and be issued within 14 days of paying the refund to the customer. If you issue a credit note that doesn't change the VAT, it should say "This is not a credit note for VAT". Your records also need to show the reason for the adjustment, which is why the template has a box for it. Check Notice 700 for the full rules.
Not VAT registered? GOV.UK doesn't set a format for you, but the same details make a clear record: leave the VAT line empty and keep a copy with the invoice it changes.
A made-up example
A painter invoiced £1,200 for a three-bedroom house, including £150 to paint the hallway ceiling. The customer decided to leave the ceiling. The painter isn't VAT registered.
| Original invoice | No. 1042, £1,200.00 |
|---|---|
| Reason | Hallway ceiling not painted, at the customer's request |
| Credited | Hallway ceiling, 1 × £150.00 |
| Total credited | £150.00 |
| How it's settled | Taken off invoice 1042: £1,050.00 left to pay |
The other papers on a job
A quote before the work, a job sheet on the day, an invoice when it's done, a receipt when they've paid, and a credit note only if the invoice needs bringing down. Working for a contractor under CIS? Use the CIS invoice template.
Invoices on your phone instead
Knockround numbers your invoices for you and sends each one with a Pay button for Apple Pay, Google Pay or card, so the customer pays from the message. It doesn't make credit notes or VAT invoices yet, so keep this template for those. Try it on the plumbing demo with made-up customers. It's free for 7 days with no card needed, then £19.99 a month.
Written by the Knockround team, 29 October 2026. VAT rules checked on GOV.UK the same day. A guide, not tax advice.