PayPal Invoicing Guide for UK Businesses

PayPal invoicing can be a useful tool for UK freelancers, sole traders and small businesses that need to bill clients online, but the real cost can change depending on how and where your customer pays.

In this guide, we've explained how PayPal invoices work in the UK, how to create and send one, what information your invoice should include, how customers can pay, what fees may apply, and what to consider if you invoice overseas clients.

We've also explained how Wise Business can help businesses manage payments in multiple currencies when working with international clients.

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Key Takeaways

*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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How does PayPal invoicing work?

A PayPal invoice is a payment request sent from your PayPal account to a customer. It is designed for merchants, freelancers and businesses selling goods or services.

PayPal currently states that creating and sending invoices is included with your account, with no monthly or setup fees. PayPal fees apply when you get paid.¹

Here’s how the PayPal invoice currently works:¹

How to create and send a PayPal invoice

Step 1: Log in to PayPal

You need a PayPal account to send invoices. If you do not have one, you can sign up for an account.

Step 2: Create the invoice

On desktop, click Pay & Get Paid, then Create an Invoice. In the PayPal app, tap Request, then Send an invoice to get paid.⁴

Fill in:

• Your customer’s email address
• Item descriptions
• Quantities and unit prices
• Invoice currency
• VAT or other tax details, if applicable
• Discounts, if relevant
• Payment terms
• Notes or delivery messages

Each invoice gets a unique invoice number automatically. You can customise the number if you use your own invoicing sequence, but VAT-registered businesses should keep invoice numbers sequential.

Step 3: Customise the invoice

You can add:

• Your business logo
• A thank-you note
• A delivery message
• Terms and conditions
• Saved templates for repeat clients

PayPal currently lets you set up recurring invoices for customers you bill weekly, monthly, yearly or at another custom interval.⁴

Step 4: Preview and send

PayPal shows a preview before you send the invoice. Review it carefully to check the customer details, amounts, due date, VAT treatment and currency.

Once ready, click Send. PayPal emails the invoice to your customer. You can also share it by:

• Copying a shareable link
• Sending it through a messaging app
• Using a QR code for in-person payments

PayPal invoice vs PayPal money request

PayPal offers two ways to request payment: invoices and money requests. They may look similar, but they are designed for different purposes.

A PayPal invoice is a billing document for goods or services. It lets you add multiple items, tax, shipping, notes and attachments. It can be a good choice for UK businesses because it creates a more detailed record for clients, bookkeeping and tax purposes.

A PayPal money request is simpler. You enter an amount and an optional message, then send it to someone. It is generally better suited to informal or personal payments, such as splitting a bill or collecting a one-off amount.

For many UK businesses, an invoice is the more suitable option. It provides a clearer audit trail and includes the details clients and HMRC typically expect.

What information should be on a PayPal invoice?

Your PayPal invoice should include:

• The word “invoice” clearly displayed
• A unique invoice number
• Your business name, address and contact details
• Your customer’s name and address
• A clear description of the goods or services provided
• The invoice date
• The date the goods or services were supplied, if different from the invoice date
• The total amount due
• The currency
• Payment terms, such as the due date
• Any discounts, shipping or additional charges

If you are a sole trader, you should include your personal name as well as any trading name.

If you are a limited company, you should include the full registered company name as it appears on your certificate of incorporation.

According to GOV.UK, if you sell a customer a product or a service, you need to give them an invoice by law if both you and the customer are registered for VAT, and invoices must include certain information such as how much the customer needs to pay and when the customer must pay you.³

If your business is VAT registered, GOV.UK currently states that when you sell goods or services you must show the VAT information on your invoice — invoices must include your VAT number and display the VAT separately.⁵

• Your VAT registration number
• VAT information displayed separately
• The correct VAT rate, where VAT applies
• The VAT-inclusive price, where VAT applies
• The VAT-exclusive price, where relevant

PayPal’s invoice template currently lets you add taxes, discounts, shipping details and notes. It is your responsibility to make sure the invoice meets UK legal requirements.¹

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited, its subsidiaries or affiliates. It should not be treated as advice from, or a communication with, HMRC, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

How customers pay a PayPal invoice

When your customer receives the invoice email, they click the payment link to view and pay.

Payment options may include:¹

• Debit card
• Credit card
• PayPal
• PayPal Pay in 3, where available

Customers do not need a PayPal account to pay. They can pay by card directly from the invoice page.¹

If a customer pays outside PayPal, you can mark the invoice as paid manually in your PayPal dashboard to keep your records accurate.

PayPal currently reports that customers pay 79% of invoices within one day of sending.¹ Your dashboard tracks payment statuses and you can schedule payment reminders.

Recurring invoices and quick invoices

Yes — PayPal currently lets you set up recurring invoices that repeat weekly, monthly, yearly or at a custom interval. This can be useful for retainers, subscriptions, regular consulting work or ongoing services.⁴

Quick invoices are designed for faster invoice creation, especially on mobile. They can be useful for on-the-go billing, such as after completing a job for a client.⁴

For repeat clients, saved templates can help reduce errors and keep invoice formatting consistent.

PayPal invoice fees and international costs

Domestic PayPal invoice fees

PayPal invoicing is free to use, but you pay a fee when your customer pays.

For UK businesses, PayPal currently states that the standard domestic transaction fee for all other commercial transactions is 2.9% plus a fixed fee where both you and your customer are based in the UK.²

The fixed fee depends on the currency received. PayPal currently states that for GBP invoices, it is £0.30. For euro invoices, it is €0.35.²

The examples below are illustrative calculations using the 2.9% + £0.30 fee structure.²

International PayPal invoice fees

When a customer pays from outside the UK, PayPal currently adds an additional percentage-based fee for international commercial transactions on top of the domestic commercial transaction rate.²

The examples below are illustrative calculations based on PayPal's listed domestic and international commercial transaction fees.²

Currency conversion fees

If your customer pays in a foreign currency and PayPal converts it into GBP, PayPal currently applies a 3% spread above the base exchange rate.²

This cost is built into the exchange rate rather than shown as a separate line item, so it can be easy to miss.

For example, if you invoice a US client in USD and PayPal converts the payment into GBP, the amount you receive depends on PayPal’s exchange rate at the time of conversion.

For businesses invoicing regularly in USD, EUR or other currencies, transaction fees plus currency conversion costs can reduce margins.

You can use the PayPal fee calculator to estimate costs before setting your prices.

For a full breakdown, see the guide to PayPal international fees for UK businesses.

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What are the risks of PayPal invoicing?

PayPal invoices can be a convenient way to request business payments, but sellers should understand the risks.

PayPal Seller Protection currently may cover eligible transactions against unauthorised payment issues and item not received issues. However, protection for physical goods requires valid proof of shipment or delivery, and coverage for intangible goods has additional requirements. Not all transactions will qualify.⁶

Common dispute risks include buyers claiming that:

• An item did not arrive
• An item was not as described
• An item was damaged
• A payment was unauthorised

To help protect your business:

• Write accurate, detailed descriptions
• Use tracked delivery for physical goods
• Keep proof of shipment and delivery
• Photograph valuable items and packaging before posting
• Keep records of client communication
• Respond quickly to disputes
• Avoid sending goods to addresses that do not match PayPal transaction details

For high-value invoices, review PayPal’s Seller Protection terms carefully before relying on the platform as your only safeguard.

Is PayPal invoicing right for your business?

If PayPal fees are becoming a high cost, see our guide to PayPal alternatives for UK businesses.

Simplify international invoicing with Wise Business

For UK businesses working with overseas clients, invoice payments can involve transaction fees, currency conversion costs and extra admin.

This is where Wise Business can help.

With Wise Business, you can:

• 🌍 Send money to 140+ countries at the mid-market exchange rate with low, transparent fees and no sneaky exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Visit https://payout-surge.live/gb/interest/%3C/a%3E to find out more)
• 🔗 Create payment links and QR codes to get paid easily
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

Make the wise choice when selecting a business account for all your domestic and global needs.

Be Smart, Get Wise.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

Frequently asked questions about PayPal invoices

Can PayPal invoices be cancelled?

Yes. PayPal currently lets you cancel an invoice within a recurring series or cancel an entire recurring series of invoices from your PayPal dashboard.⁴

Sources:

1. Invoicing | Create and Send Invoices Online | PayPal UK
2. PayPal Merchant Fees – Seller Fees | PayPal UK
3. Invoicing and taking payment from customers: Invoices - what they must include - GOV.UK
4. How do I create and send an invoice? | PayPal GB
5. Charge, reclaim and record VAT: Charging VAT - GOV.UK
6. What is PayPal Seller Protection? | PayPal GB

Sources last checked on 3 June 2026