Guides

Invoicing in a foreign currency as a sole trader

Checked against GOV.UK on 22 October 2026

General guidance taken from GOV.UK, not advice about your own tax affairs. HMRC's rules change, so the GOV.UK pages listed at the end are the final word.

You can invoice a client in euros, dollars or any other currency. What matters for your tax is turning the money into pounds at the right moment and at an accepted rate, and under the cash basis that moment is when you're paid, not when you invoice.

What the invoice must include

GOV.UK lists what an invoice must include, whatever currency it's in:

  • a unique identification number
  • your name and any business name, and your address and contact details
  • the name and address of the customer you're invoicing
  • a clear description of what you're charging for
  • the date the goods or service were provided (the supply date)
  • the date of the invoice
  • the amounts being charged
  • the VAT amount, if applicable
  • the total amount owed

If you trade under a business name, you must also give an address where legal documents can be delivered. GOV.UK's list doesn't mention currency at all.

Which figure counts for your tax

Under the cash basis, the default for sole traders, you "only record income or expenses when you receive money or pay a bill". So an invoice for €1,200 isn't income yet. The payment is, on the day it arrives, converted into pounds at that date.

  • If your bank converts the payment into pounds, the rate it used is one HMRC says you may use.
  • If you keep the money in a currency account, convert it at a rate from a reputable source as at the date you received it: HMRC's monthly rate, London closing rates, or your bank's rate. See HMRC exchange rates for which you can use.

For example, €1,200 that arrives on 21 October 2026, converted at HMRC's monthly rate for October 2026 of 1.1665 euros to the pound, is £1,028.72 of income. The HMRC exchange rate calculator works this out for any month since January 2022.

A sterling figure on the invoice

Some traders print an approximate sterling equivalent on a foreign-currency invoice, for the client's or their own reference. It isn't the figure for your tax: under the cash basis that's fixed when the money arrives, usually at a different rate. If you show one, say that it's approximate.

If you use traditional accounting

With traditional accounting you record income "by the date you invoiced", so the invoice itself is converted, at the exchange rate on that date. An average rate for the month is acceptable if rates don't swing significantly within it.

When the client then pays at a different rate, HMRC's manual says that "any differences arising from the settlement" should generally be recognised in profit or loss: an exchange gain or loss on top of the invoice. This is one reason the cash basis is simpler for most sole traders paid in other currencies. See cash basis or accruals.

Bank and transfer charges

GOV.UK lists bank charges among the financial costs you can claim as allowable expenses. If you're unsure whether a particular fee counts, HMRC says to contact them.

VAT

If you're not VAT registered, your invoice carries no VAT: GOV.UK lists the VAT amount only "if applicable".

If you are VAT registered and issue a VAT invoice in a foreign currency for a UK supply, HMRC's VAT guide says you "must convert the total amount of VAT payable into sterling". It allows the UK market selling rate at the time of supply, or a period rate HMRC publishes. VAT on sales to customers outside the UK has further rules of its own, set out in the same guide.

Sources