What is Debit Note?
A debit note is a document sent by a buyer to a seller to formally request a credit note, or by a seller to a buyer to notify them of an additional amount owed beyond the original invoice.
A debit note serves two main purposes in business transactions:
- Buyer to seller: A formal request for a credit note — for example, when goods arrived damaged or a service was not delivered as agreed
- Seller to buyer: A notification that an additional charge is being applied — for example, when the original invoice undercharged due to an error or when additional work was performed
For freelancers, the most common scenario is using a debit note to request an upward adjustment. If you quoted £500 for a project but the agreed scope expanded and the client approved additional work worth £200, you could issue a debit note for £200 or simply issue a supplementary invoice.
A debit note should include:
- A unique debit note number
- Reference to the original invoice
- The amount being debited and the reason
- The date of issue
- VAT details if applicable
In practice, many UK freelancers and small businesses use supplementary invoices instead of formal debit notes. However, if you work with larger organisations, understanding debit notes helps you navigate their procurement and accounts processes.
For VAT purposes, debit notes that increase the amount owed must be reflected in your VAT records just like any other taxable transaction.
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Frequently Asked Questions
What is the difference between a debit note and an invoice?
An invoice is the original payment request for a transaction. A debit note is an adjustment document that either increases the amount owed or requests a reduction. In practice, many businesses use supplementary invoices instead of debit notes.
Do I need to issue debit notes as a freelancer?
Most freelancers rarely need to issue formal debit notes. If you need to charge more than the original invoice, issuing a second invoice for the additional amount is simpler and widely accepted.
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