Credit Note Template

What is a credit note?

A credit note is a document a seller gives a customer to reduce the amount owed on an earlier invoice, for example after goods are returned, a price was overcharged, or a discount was agreed later. It does not replace the invoice; it points to it by number and date and shows the amount credited, with any tax.

1. Type your business and the customer under Credit to.
2. Enter the original invoice number and date.
3. List what is being credited, with quantity and price.
4. Add tax if the original invoice charged it.
5. Download the PDF and send it with your records.

What must a credit note include for VAT?

HMRC's VAT Notice 700 says a valid credit note shows its number and date, your name, address and VAT number, the customer's name and address, a description of what is credited with quantities and amounts, the total credited without VAT, the VAT rate and amount, and the number and date of the original VAT invoice.

The same notice says a credit note issued without a VAT adjustment should state This is not a credit note for VAT. Tick that option in the settings when it applies. This is general information, not tax advice.

What is the difference between a credit note and a refund?

A credit note is the paperwork that records the reduction; a refund is the money going back. The customer may get a refund, or keep the credit to set against their next invoice. Either way, the credit note keeps both sets of books in line with the original invoice it refers to.

For the original bill, use the invoice generator.