Self-billing explained: when your client writes your invoice
In some arrangements you never send an invoice at all. The agency or contractor produces it for you from your timesheet. That's self-billing. It saves time, but you need to know what you've agreed to and how to check you've been paid correctly.
On this page
- What self-billing is
- You should have a self-billing agreement
- Self-billing and VAT
- How to check a self-billed invoice
- What HMRC says a self-billing agreement must contain
- Self-billing and CIS
- Keep your own records anyway
- Can you opt out?
- Self-billing vs umbrella pay
- Worked example: spotting a short payment
- Questions to ask before you agree to self-billing
- Common self-billing problems
What self-billing is
In self-billing, the customer (the agency, contractor or platform paying you) raises the invoice for the work you've done and pays you against it. You don't send your own. It's common with recruitment agencies, haulage and courier firms, construction main contractors, and some marketplaces. They prefer it because their system already knows the hours and rates, and it stops dozens of suppliers sending invoices in different formats.
You should have a self-billing agreement
Self-billing should rest on a clear written agreement. It typically covers:
- that the customer will issue invoices on your behalf, and that you won't issue your own for the same supplies;
- the period the agreement covers;
- how invoices are numbered (usually from the customer's own sequence);
- how disagreements and corrections are handled; and
- for VAT-registered suppliers, that you'll tell them if your VAT registration changes.
Read it before signing. If you're not VAT registered, make sure the invoices won't add VAT in your name.
Self-billed invoices still follow the invoice numbering rules, using the customer's sequence.
Self-billing and VAT
If you're VAT registered, HMRC's VAT Notice 700 sets out specific conditions for self-billing. The agreement must be in writing and reviewed periodically, and the self-billed invoice must contain the usual VAT invoice details plus a statement that it's a self-billed invoice. Check the current notice if VAT applies to you, because invoices that don't meet the conditions can cause problems for both sides.
How to check a self-billed invoice
Because someone else did the sums, checking is your job. Every time, compare the self-bill with your own record:
- Hours and days: do they match your timesheet, including overtime and weekend hours?
- Rates: is each type of hour at the agreed rate? Watch for overtime paid at the basic rate.
- Deductions: CIS deductions, fees, or "margin" lines. Are they expected and correct?
- Your details: your name, address, UTR, and VAT status shown correctly.
- Payment: does the amount in your bank match the net on the self-bill?
Raise any differences in writing promptly. The customer usually corrects them with an adjustment or credit on the next self-bill.
Self-billing is common with agencies, see how to invoice an agency weekly.
What HMRC says a self-billing agreement must contain
HMRC's VAT notice on self-billing (700/62) covers the VAT side. It says you only get self-billed invoices if you have agreed to this method, and that the customer doesn't need HMRC authorisation to run it. For VAT, a valid agreement must be in writing, in place before self-billing starts, and must:
- include your agreement to the customer raising invoices for your supplies;
- say you won't raise VAT invoices for supplies the agreement covers;
- say you'll accept each self-billed invoice the customer creates;
- contain a start date and an expiry date (the expiry can be tied to the contract);
- say you will tell the customer if you stop being VAT registered, transfer your business as a going concern or register under another VAT number.
HMRC advises customers to review agreements every 12 months, and says VAT self-billed invoices must carry the reference "self billing". The notice is aimed at VAT-registered suppliers. If you aren't VAT registered, the same sensible agreement still protects you, but the VAT wording won't apply to you.
Self-billing and CIS
Self-billing doesn't change the CIS rules. If you work for a contractor or agency under CIS, they must still deduct 20%, 30% or 0% depending on your status, and give you a payment and deduction statement within 14 days of the end of each tax month. The deduction is worked out from the invoice total after taking away VAT and the costs you paid for yourself, such as materials. Check that the self-billed invoice shows materials separately if you bought any, or the deduction can be too high. Our CIS calculator lets you check the figure, and how to invoice for materials shows the layout.
Keep your own records anyway
Self-billing doesn't remove your record-keeping duties. Keep the self-billed invoices, your timesheets, remittance advice and bank records. GOV.UK says sole traders must keep records for at least 5 years after the 31 January submission deadline for the tax year. Many self-employed people keep their own "shadow" invoice for each week, not to send but to check against the self-bill. It's quicker than reconstructing hours from memory.
Can you opt out?
Sometimes. If a client insists on self-billing as part of how it works, you may not have much choice. If you'd rather invoice yourself, ask before you start. Some agencies accept supplier invoices for limited-company contractors but self-bill sole traders, or vice versa.
Self-billing vs umbrella pay
Don't confuse the two. With self-billing you're still running your own business and the customer just writes the invoice. With an umbrella company, you're an employee and get a payslip.
Worked example: spotting a short payment
Sam keeps his own record each week. He worked 40 normal hours at £20.00 and 6 overtime hours at ×1.25, which is £25.00 an hour. His own sums are:
| Sam's record | Agency self-bill | |
|---|---|---|
| Normal hours | 40 × £20.00 = £800.00 | 40 × £20.00 = £800.00 |
| Overtime | 6 × £25.00 = £150.00 | 6 × £20.00 = £120.00 |
| Total labour | £950.00 | £920.00 |
| CIS at 20% | £190.00 | £184.00 |
| Payable | £760.00 | £736.00 |
The agency paid the overtime at the basic rate, so Sam is £30.00 short before CIS and £24.00 short in his bank. Because he kept his own record, he can show the sums to the agency in one email and ask for an adjustment on the next self-bill. Without it he would have to rebuild the week from memory.
Questions to ask before you agree to self-billing
- Which rates will the self-bill use, and where are they written down?
- When is the timesheet cut-off, and when is payment made?
- What happens if a timesheet is approved late?
- How do I raise a correction, and how long does an adjustment take?
- Will CIS deductions be shown, and will I get a payment and deduction statement? See CIS payment and deduction statements.
Common self-billing problems
- Overtime or weekend hours paid at the basic rate, as in the example.
- Approved hours that differ from submitted hours, with no explanation.
- Duplicate or missing weeks in the numbering, often after a timesheet was resubmitted.
- Unexpected fees or margin lines not in your agreement.
Use the overtime calculator to check overtime lines, and the payment terms guide if payment is late.
Frequently asked questions
Do I need to send an invoice if I'm self-billed?
No. Under a self-billing agreement, the customer issues the invoice. Don't also invoice for the same work.
Is self-billing legal for VAT?
Yes, if the conditions in HMRC's VAT Notice 700 are met, including a written agreement and the invoice stating it's self-billed.
What if a self-billed invoice is wrong?
Tell the customer in writing with your timesheet. They normally correct it with an adjustment or credit.
Whose invoice numbers are used?
Usually the customer's own sequence for self-billed invoices, as set out in the agreement.
How do I check a self-billed invoice against my own records?
Compare hours, rates, deductions and the amount that reached your bank. Overtime paid at the basic rate is a common error.
Does a self-billing agreement have to be in writing?
For VAT, yes. HMRC says it must be in place before self-billing starts, with a start and expiry date and your agreement not to raise your own VAT invoices for those supplies.
Do I still need CIS statements with self-billing?
Yes. If deductions are taken, the contractor or agency should give you a payment and deduction statement within 14 days of the end of each tax month.
Sources
- Self-billing (VAT Notice 700/62) – GOV.UK
- What you must do as a CIS contractor: make deductions and pay subcontractors – GOV.UK
- VAT guide (VAT Notice 700), section on self-billing – GOV.UK
- Business records if you're self-employed – GOV.UK
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.