A receipt is a document that confirms a payment has been made. Unlike an invoice, which requests payment, a receipt is issued after the money has been received – serving as proof of purchase for the customer and proof of income for the seller. Receipts are especially important for cash transactions, in-person sales and any situation where the customer needs written confirmation that they have paid.
What should a receipt include?
There is no single legal format for a receipt in the UK, but a well-prepared receipt should give both parties a clear record of the transaction. The details you need to include depend on whether you are VAT-registered and on the value of the sale.
#Simplified VAT receipts: If you are VAT-registered and the sale is £250 or less (including VAT), you can issue a simplified VAT receipt instead of a full VAT invoice. A simplified receipt only needs to show your business name and address, VAT number, date, a description of the goods or services, and the total amount including VAT. You do not need to show the customer's details or a separate VAT breakdown – but you must show the VAT rate applicable to each item.
When and why is a receipt used?
A receipt is issued whenever you receive a payment and the customer needs written confirmation:
Cash sales and in-person transactions – When a customer pays in cash, there is no automatic bank trail. A receipt is the only proof of payment for both parties.
Confirming invoice settlement – After a customer pays an outstanding invoice, a receipt confirms the payment has been received and the amount owed is cleared. Reference the original invoice number for a clear document trail.
Deposits and part-payments – When you receive a deposit via an advance invoice, a receipt confirms the partial payment and shows the remaining balance.
Expense records and tax returns – Your customers may need receipts to claim business expenses, complete Self Assessment returns or reclaim VAT. Without a valid receipt, HMRC may disallow the expense.
Returns, refunds and disputes – A receipt serves as proof of purchase if the customer later needs to return goods, request a refund or resolve a dispute about what was paid.
Receipt vs. invoice: An invoice is a request for payment – it tells the customer what they owe. A receipt is confirmation of payment – it tells the customer what they have already paid. In many B2B transactions, a bank statement or payment confirmation is considered sufficient proof, but a formal receipt provides a clearer paper trail and is often expected for cash payments or when the customer specifically requests one.
Always issue a receipt for cash payments – bank transfers leave a digital trail, but cash does not. A receipt protects both you and the customer.
Use sequential numbering – just like invoices, receipts should follow a consistent numbering system for easy reference.
Keep copies for at least 6 years – HMRC requires you to retain business records, including receipts, for a minimum of 6 years.
Match receipts to invoices – always reference the related invoice number so your accounts stay tidy and audit-ready.