Credit note template, with the VAT details HMRC asks for
When an invoice was too high, goods came back or a price was cut after the fact: credit it, do not edit it.
From: your business
Bill to: your customer
Number, dates and terms
Total credit
£117.60
including £19.60 VAT
Harbour Design Ltd
12 Quay Street
Bristol BS1 4DB
accounts@example.co.uk
VAT reg. no. GB 123 4567 89
Credit note
| Credit note no. | CN-2026-0001 |
| Date of issue | 17 October 2026 |
| Against invoice | INV-2026-0042 |
Bill to
Northgate Bakery Ltd
5 Northgate
Bath BA1 5AS
| Description | Qty | Unit price | VAT rate | Amount excl. VAT |
|---|---|---|---|---|
| Returned item: desk lamp, faulty | 2 | £49.00 | VAT 20% | £98.00 |
| Subtotal | £98.00 |
| VAT 20% on £98.00 | £19.60 |
| Total credit | £117.60 |
Credit for returned goods against the invoice referenced above.
Simplified VAT invoice possible (£250 or less)
All required details present
HMRC, VAT Notice 700/21, section 4
- Present: A sequential number that identifies the invoice
- Present: Your business name, address and contact details
- Present: Full company name as on the certificate of incorporation · Limited company
- Present: Customer name and address
- Present: A clear description of what you are charging for
- Present: Date of the invoice
- Present: Time of supply (tax point), if different from the invoice date
- Present: Your VAT registration number
- Note: Issue it within 30 days of the supply
Made in your browser. Nothing you type is sent to a server; your business details are kept on this device only, for the next invoice.
Total credit
£117.60
A credit note reduces an invoice you have already issued, for a return, an overcharge, a cancelled service or a discount agreed afterwards, and it is the correct fix because an issued invoice should never be edited or deleted. HMRC's VAT guide, paragraph 18.2.3, sets out what a valid credit note must show: its own number and date of issue, your name, address and VAT registration number, the customer's name and address, a description of what is credited with the quantity and amount, the total credited excluding VAT, the rate and amount of VAT credited in sterling, and the number and date of the original VAT invoice. It must reflect a genuine mistake, overcharge or agreed reduction and be issued within 14 days of any refund. The template does all of this: the sample credits two faulty desk lamps at £49 each against invoice INV-2026-0042, with £19.60 of VAT credited. The title follows the country: "Credit note" in the UK and Canada, "Credit memo" in the US and "Adjustment note" for a GST-registered seller in Australia.
Checked by Radif Partners · Editorial policy · Methodology
The details of a valid UK credit note
The list in VAT Notice 700 is short and every item has a reason. The original invoice number ties the credit to the VAT already declared; the VAT in sterling lets your customer reduce the input tax they claimed by exactly that amount; the description stops a credit note from becoming a blank cheque. The generator's fields map onto the list as follows.
| Required by HMRC | Where it comes from in the generator |
|---|---|
| Identifying number and date of issue | Number (CN-2026-0001) and invoice date |
| Your name, address and VAT registration number | From: your business |
| Customer name and address | Bill to |
| Description, quantity and amount per item | Items |
| Total credited excluding VAT | Subtotal |
| Rate and amount of VAT credited, in sterling | VAT line (add the sterling figure if you invoice in another currency) |
| Number and date of the original VAT invoice | Original invoice number field |
Type the amounts as positive numbers: the document is titled as a credit and its total reads "Total credit", so the customer cannot mistake it for a new charge.
Credit note, refund or new invoice
A credit note says how much the customer no longer owes. What happens to that money is a separate decision: you refund it, or the customer deducts it from the next invoice. Write which one in the notes, with the refund date or the invoice it will be set against. When the original sale simply had the wrong price, the clean sequence is a credit note for the full original invoice, then a new invoice at the right price, so each document is internally consistent.
Credit memo and adjustment note
US businesses call the same document a credit memo; no federal rule governs it, but if the original sale carried sales tax, the memo should credit the tax on the returned items too so the customer's records match yours. In Australia, a GST-registered seller who reduces the price of a taxable sale issues an adjustment note, and the generator prints that title when the country is Australia and GST registration is on. In Canada, the credit note should name the original invoice and the GST/HST (and QST in Quebec) credited, so the customer can reduce the tax credit claimed. For a straightforward refund of a paid amount without any change to the sale, a receipt recording the repayment may be all you need.
If the reduction comes from an early payment discount agreed on the invoice, the early payment discount guide explains the HMRC wording that avoids issuing a credit note at all.