How to Invoice for a Deposit: The Upfront Payment Guide for Freelancers
A deposit is the simplest risk-management tool a freelancer has: money in your account before the work begins. Yet most freelancers either never ask for one, or ask awkwardly and send an invoice that confuses the client. This guide covers how much deposit to ask for, the exact wording to put on the invoice, how to handle VAT/GST on deposits, and what happens if the client cancels — so you can ask confidently and get paid before you start.
Why freelancers should always ask for a deposit
A deposit does three things a contract alone can't. First, it commits the client — people who have paid money respond to emails. Second, it covers your early costs and the opportunity cost of reserving time on your calendar. Third, it halves your worst-case scenario: if a client vanishes, you're chasing half an invoice instead of a whole one.
If you're nervous about asking, reframe it: deposits are standard practice across trades, agencies, photographers, builders, and consultants. Clients who push back hard on a reasonable deposit are telling you exactly how they'll behave at invoice time. The right clients say yes without drama.
How much deposit to ask for:
- 50% upfront — the standard for project work (design, development, writing projects). Simple, defensible, and leaves an equal balance that motivates you to finish.
- 30–40% upfront — for larger projects where 50% feels steep, or where milestones will cover the rest. Common on projects over a few thousand.
- 100% upfront — for small jobs under a few hundred, rush work, new clients you haven't vetted, or anything digital you can't "un-deliver" (strategy calls, audits, templates).
- A fixed booking fee — for calendar-based work like photography or events, where a fixed non-refundable booking fee (e.g. £150) reserves the date rather than a percentage.
The deposit amount should be agreed in writing before you invoice — in your quote or contract — so the invoice is a restatement of something already decided, not a surprise.
How to write a deposit invoice
A deposit invoice looks like a normal invoice with two differences: the description says it's a deposit, and the totals reference the full project amount so the client can see what remains.
What to include:
- Your usual business details — name, address, contact, invoice number, date.
- Client details — name and address as normal.
- Clear line-item description — "Deposit — 50% of project total (Quote #Q-2026-014, website redesign)". Reference the quote or contract number so there's no ambiguity.
- The full project total shown — add a line or note: "Project total: £3,000. Deposit due now: £1,500. Balance due on delivery: £1,500." This prevents the classic dispute where a client thinks the deposit was the full price.
- Payment terms — deposits are typically "due on receipt" or "due before work begins". State plainly: "Work begins on receipt of this deposit."
- Refund/cancellation terms — one line referencing your policy (see below): "Deposits are non-refundable once work has begun — see Terms §4."
Example deposit invoice line items:
| Description | Amount | |---|---| | Deposit — 50% of project total (Quote #Q-2026-014, website redesign) | £1,500.00 | | Project total £3,000 · Balance due on delivery £1,500 | — |
You can build this in seconds with our free invoice generator — just set the line item as the deposit and add the balance as a note.
How to handle the balance invoice later
When the project is done, send a second invoice for the balance. Label it clearly: "Balance — remaining 50% of project total (Quote #Q-2026-014)". Reference the deposit: "Deposit of £1,500 received 13 Oct 2026 — balance due £1,500."
Two common setups:
- Two invoices (recommended): one invoice for the deposit now, one for the balance on completion. Each is a clean, separate record. This is what most freelancers should do.
- One invoice, part-paid: some freelancers issue a single invoice for the full amount and record the deposit as a part-payment. This works but muddies the record if the client is slow to pay the deposit itself — and the client can be confused about what's due when.
For longer projects with more than two payment stages, deposits graduate into milestone billing — staged payments tied to each phase of the project.
VAT and GST on deposits: the tax rules
This is where freelancers most often get it wrong. In the UK, VAT is generally due at the tax point — for a deposit, that's the earlier of the invoice date and the date you receive the money (HMRC's rules on time of supply). So if you invoice for a VAT-inclusive deposit on 1 October and the client pays on 5 October, the VAT is due for the period covering 1 October — the invoice date. If you're on the VAT cash accounting scheme, it's due when you receive the money instead. (If you're not VAT-registered, none of this applies — and our UK sole trader invoicing guide covers that case.)
In Australia, GST on a deposit works similarly: the deposit is part of the taxable supply, and GST is generally attributable at the earlier of invoicing or payment, depending on your accounting basis (cash vs accrual). The practical takeaway in every country: deposit invoices are real invoices for tax purposes — record them, number them in your normal sequence, and include the tax line exactly as you would on any invoice. Don't treat a deposit as "off the books" until the real invoice arrives. See our guides to UK VAT invoices and Australian tax invoices for the full rules.
What if the client cancels? Deposit refund rules
Sort this out in your terms before you invoice, because the time to argue about refunds is not after the client has cancelled.
- Before work begins: most freelancers keep a stated booking/administration fee and refund the rest, or keep the deposit entirely if their terms say deposits are non-refundable. Either is fine as long as it was agreed upfront.
- After work has begun: the deposit is earned. Your terms should state that deposits are non-refundable once work starts, and you can invoice for any additional work completed beyond the deposit amount.
- If the client cancels mid-project: you keep the deposit, invoice for work done to date (minus the deposit already paid), and walk away with the maths on your side.
One line in your contract does 90% of this work: "The deposit secures your booking and is non-refundable once work has begun. If you cancel before work begins, the deposit is refunded less a £75 administration fee." Adjust the numbers to your business.
Also decide what happens if you cancel: the professional standard is a full refund of the deposit plus handover of any work done. Put that in your terms too — it makes clients far more comfortable paying upfront.
Scripts: how to ask for a deposit without awkwardness
The awkwardness is entirely in your head — clients expect this. But wording helps. Use these in your quote or onboarding email:
- The standard ask: "To secure your slot in my schedule, I take a 50% deposit (£1,500) before work begins, with the balance due on delivery. I'll send the deposit invoice today — work starts as soon as it's paid."
- For nervous clients: "The deposit covers the design phase. If you're not happy with the first draft, we'll part ways there — you'll never owe the balance on work you didn't approve."
- For pushback: "I understand — it's a commitment. It's also what lets me turn down other work to hold your dates. I'm afraid I can't start without it, but I'm happy to split it into two smaller staged payments if that helps." (This is a natural bridge to milestone billing.)
- For repeat clients: many freelancers waive deposits for trusted repeat clients. That's fine — it's a loyalty perk, not a policy change. Just don't waive it for a client who's ever paid late.
Deposit invoicing checklist
- [ ] Deposit percentage and refund terms agreed in writing (quote/contract) before invoicing
- [ ] Invoice clearly labelled as a deposit, referencing the quote number
- [ ] Full project total and remaining balance shown on the invoice
- [ ] Payment terms stated ("due before work begins")
- [ ] Numbered in your normal invoice sequence and recorded for tax
- [ ] VAT/GST applied correctly per your country's deposit rules
- [ ] Balance invoice sent on completion, referencing the deposit received
FAQ
Should I ask for a deposit on every project?
For project work over a few hundred — yes, make it non-negotiable. For tiny jobs under ~£100, the admin can outweigh the benefit; consider 100% upfront instead. For trusted long-term retainer clients, deposits are usually unnecessary since you bill regularly anyway (see retainer invoicing).
Is a deposit legally binding?
The deposit itself doesn't create the contract — your written agreement does. But a paid deposit is strong evidence the client agreed to the terms. Always pair the deposit invoice with written terms covering scope, cancellation, and refunds.
Can I spend the deposit before the work is done?
Practically, yes — it's your money once paid (subject to your refund terms). But keep enough buffer that you could refund it if the client cancels before work begins under terms that require a refund. Don't treat a non-refundable deposit from a not-yet-started project as profit you've banked.
What if a client refuses to pay a deposit?
First, try the split-payment script above — sometimes it's genuinely a cash-flow objection, not a trust one. If they still refuse, that's data: clients who won't commit £500 upfront are the same clients who dispute £2,000 invoices. It's usually better to lose the project than to work unsecured for someone who's already shown you their payment behaviour.
Do I invoice the deposit with or without VAT?
With VAT (if you're VAT-registered) — the deposit is part of the taxable supply. The VAT treatment follows your country's tax-point rules: in the UK, generally the earlier of the invoice date and payment receipt. When in doubt, invoice it exactly like a normal invoice and let your accounting handle the timing.