Skip to main content
document type

Deposit Invoice Template

A deposit invoice asks a customer to pay part of the price now to secure something: a date in your diary, a hire booking, stock you will order, a slot in a production schedule. What makes it different from an ordinary invoice is the promise attached to the money: what the deposit secures, when the balance is due, and whether the deposit is refunded, partly kept or lost if the customer cancels. Two kinds of deposit need to be kept apart. A booking deposit is a part payment of the price and is usually taxed like one. A security deposit, taken against damage to hired equipment or premises and returned at the end, is not a payment for anything and normally stays off the sales invoice. If you want an invoice for a planned instalment of a contract price, see the advance payment invoice; for full payment before you ship an order, see the prepayment invoice. The download is an editable HTML file with the usual invoice header, line table and totals, plus fields for the deposit type, booking reference, total price, deposit amount, what it secures, the balance and refund terms. Fill it in your browser, then print it or save it as PDF.

Draft this invoice
Preview this editable document

Download the HTML file to edit its fields, then print or save as PDF. Totals are entered manually.

What This Template Includes

  • Deposit type: booking deposit (part of the price) or returnable security deposit
  • Booking, quote or contract reference
  • What the deposit secures (date, hire period, stock, production slot)
  • Total price before tax
  • Deposit percentage and amount due now
  • Deposit due date, and what happens if it is not paid
  • Balance due and when it will be invoiced
  • Refund and cancellation terms for the deposit
  • Tax on the deposit, or 'no VAT: refundable security deposit'

How to Create Your Deposit Invoice

  1. 01

    Describe your work

    Type a plain English description of the services you provided, the client, and the amount.

  2. 02

    AI generates your invoice

    InvoiceQuickly's AI drafts the client, line items, dates, and totals for you to review before saving.

  3. 03

    Review, download, and send

    Check every detail, download the PDF, or use Pro to email the PDF directly to your client.

Recommended Payment Terms

A deposit is usually due on receipt or within a few days, because it is what holds the booking; say on the invoice that the date or stock is not secured until it is paid, and by when. Set out the balance in the same place: its amount, its due date (for example 14 days before the event, or on completion) and whether it will come on a separate invoice. The refund terms matter most. Say plainly when the deposit is refundable in full, when part is kept and when it is lost. For consumers, keep the amount you keep linked to the costs you cannot recover: the UK Competition and Markets Authority's unfair-terms guidance (CMA37) says a genuine deposit will not normally be more than a small percentage of the price, and some US states cap deposits on certain contracts, such as California's limit of $1,000 or 10%, whichever is less, on home improvement contracts. Business customers are bound mainly by the contract you agree.

Need help writing payment terms? Read our guide to invoice payment terms for best practices and templates.

Tax Information

In the UK, a booking deposit is an advance payment: HMRC says VAT is due on the date you issue a VAT invoice for it or receive it, whichever is earlier, and if the customer cancels and you keep a deposit for a supply you were going to make, the VAT already accounted for remains due. A returnable security deposit is different: HMRC says you do not account for VAT on a deposit that is refunded in full when hired goods come back safely, or kept to cover loss or damage. Timing matters too. Under VAT Notice 700, a VAT invoice issued before you supply something creates the tax point for the amount on it, so invoicing the full price on the day you take a deposit brings the VAT on the whole price forward; a separate invoice for the deposit amount does not. In the EU, VAT on payments on account is likewise due when the payment is received. US sales tax on deposits depends on the state and on when the sale is complete. InvoiceQuickly applies one tax percentage per invoice and copies saved tax IDs to new invoice PDFs, so put a security deposit on its own document, not on a taxed invoice, and add your number in the notes. This is not tax advice; check with your tax authority or an adviser.

Industry context (2026)

Official guidance draws three lines that shape a deposit invoice. First, tax timing: HMRC's guidance 'VAT: instalments, deposits, credit sales' treats a deposit for a later supply as an advance payment with a tax point at the earlier of the VAT invoice or receipt of the money, and says VAT remains due if the customer withdraws and the deposit is kept. Second, security deposits: the same guidance says no VAT is due on a deposit refunded in full when hired goods are returned safely, or kept to cover loss or damage, and HMRC's internal manual VATTOS5135 (updated 8 April 2025) says such payments do not normally represent consideration for a supply. Third, fairness: the UK Competition and Markets Authority's guidance on unfair contract terms (CMA37, updated 22 July 2026, paragraphs 6.60 and 6.62) says a genuine deposit may be kept if it works as a binding reservation, but will not normally be more than a small percentage of the price, and keeping a larger prepayment is more likely to be unfair unless it reflects unavoidable costs or lost profit. That guidance applies to consumer contracts. In the US, deposit limits are set by state law for particular contracts; for example, California's Contractors State License Board caps a home improvement down payment at $1,000 or 10% of the contract price, whichever is less (Industry Bulletin 22-14).

Worked example

Brightwave AV Hire, a UK VAT-registered business, hires PA and lighting equipment to a charity for its gala on 12 December 2026 under quote Q-118: hire £1,800.00 plus VAT at 20%. Its terms ask for a 25% booking deposit, refundable in full until 12 November, and a £500.00 returnable security deposit before the kit leaves. Invoice INV-0450, issued 2 November: 'Booking deposit 25%, PA and lighting hire 12 Dec 2026, quote Q-118, refundable in full until 12 Nov', £450.00, VAT £90.00, total £540.00, due on receipt. Because only the deposit is invoiced, only £90.00 of VAT has its tax point in November. The £500.00 security deposit is taken by card pre-authorization on 11 December and is not invoiced; it carries no VAT because it will be refunded when the kit comes back undamaged. After the gala, invoice INV-0472, issued 14 December: 'PA and lighting hire 12 Dec 2026, quote Q-118: £1,800.00 less deposit invoiced on INV-0450 £450.00', £1,350.00, VAT £270.00, total £1,620.00, net 14. Check: £540.00 + £1,620.00 = £2,160.00, which is £1,800.00 plus £360.00 VAT, and £90.00 + £270.00 = £360.00. The kit comes back undamaged on 14 December and the pre-authorization is released. Had Brightwave invoiced the full £2,160.00 on 2 November and recorded the £540.00 as a partial payment, the job would have needed one invoice instead of two, but all £360.00 of VAT would have had a November tax point.

Common mistakes to avoid

Not saying what the deposit secures

A line that says only 'Deposit: £450' leaves room to argue later about whether the date was ever held. Name the booking, the date or stock and the quote it relates to.

Leaving out the refund terms

If the invoice and contract are silent, a cancelling customer will ask for the whole deposit back. Put the refund rule, with dates, on the deposit invoice.

Charging VAT on a security deposit

A returnable security deposit is not payment for the hire, so charging VAT on it overcharges the customer and overstates your VAT. Keep it off the taxed invoice.

Invoicing the full price on day one without meaning to

For a VAT-registered business, a VAT invoice for the full price fixes the tax point for all of it, possibly months before you are paid. If you only want the deposit's VAT now, invoice only the deposit.

Forgetting to deduct the deposit from the balance

A final invoice for the full price after a deposit was invoiced charges the customer twice. Reference the deposit invoice and bill only what is left.

Invoicing Tips

  • 1Write what the deposit secures in the line itself: 'Booking deposit 25%, PA and lighting hire 12 Dec 2026, quote Q-118', not 'Deposit'.
  • 2State the refund rule next to the amount, with dates: refundable in full until a set date, a set percentage kept after it, and nothing refunded after another date.
  • 3Never mix a security deposit with a taxed booking deposit on one invoice. The security deposit is returned and normally carries no VAT; take it on a separate document or as a card pre-authorization.
  • 4When you bill the balance, name the deposit invoice in the balance line or notes, for example 'Hire £1,800.00 less deposit invoiced on INV-0450 £450.00'. The customer can see nothing was charged twice.
  • 5If you take the deposit by card through a payment link, check that the link is for the deposit amount, not the full invoice.
  • 6Keep a deposit register: who paid, how much, against which booking, and when it is due back or applied. Unclaimed or forgotten security deposits are a common source of complaints.

Related Resources

Frequently Asked Questions

What is a deposit invoice?

An invoice for part of the price, paid upfront to secure a booking, a date, stock or a place in your schedule. It shows the total price, the deposit amount, what the deposit secures, when the balance is due and when the deposit is refundable.

Is a deposit invoice the same as an advance payment or prepayment invoice?

They overlap. All three ask for money before you deliver. A deposit invoice is about securing a booking and comes with refund and cancellation terms. An advance payment invoice bills an agreed instalment of a contract price. A prepayment invoice usually asks for the full price before you ship an order.

Is a deposit refundable?

Only if your terms say so. Write the rule on the invoice: refundable in full until a date, partly kept after it, or non-refundable. For consumers, a deposit you keep should reflect costs you cannot recover; very large non-refundable deposits risk being unfair under consumer law in the UK and in many other places.

Do I charge VAT on a deposit?

On a booking deposit that is part of the price, usually yes: in the UK the VAT is due when you invoice or receive the deposit, whichever is first. On a returnable security deposit that is refunded when hired goods come back safely, or kept for damage, HMRC says you do not account for VAT.

How do I show a deposit on the final invoice?

Bill the balance and reference the deposit. If the deposit had its own invoice, describe the final line as the full price less the deposit already invoiced, with the deposit invoice number, so the tax on both invoices adds up to the tax on the full price. If you invoiced the full price at the start, there is no final invoice: the customer pays the remaining balance on the same invoice.

Can InvoiceQuickly create a deposit invoice?

There is no deposit feature, but there are two ways to handle one. Issue the full-price invoice and record the deposit as a partial payment when it arrives, which tracks the balance in your account on every plan; the PDF shows the full total, so write the deposit and balance schedule in the notes before sending. Or, as in the example on this page, issue a separate invoice for the deposit amount and a later invoice for the balance. Line amounts cannot be negative, so reference the deposit in the balance line's description.