· About 1,600 words.

Invoicing in USD or EUR feels intuitive — write the foreign-currency amount, send it, get paid — until you hit the first quarterly bookkeeping where you realise you've got 12 USD invoices and no idea what rate to record any of them at. This guide covers the currency-choice decision, the HMRC conversion rules, and the practical setup that makes it boring rather than annoying.

Should you invoice in GBP or the client's currency?

Invoice in the client's currency when…

• The client expects local-currency invoicing (typical for US/EU corporate AP teams)
• You have a multi-currency account so you can hold the foreign currency without immediately converting
• You want flexible FX timing — to convert when rates are favourable, not when the invoice happens to land
• The contract is long enough that you'd rather defer the FX decision
• The client is in a country where their bank charges them heavy fees to send GBP

Invoice in GBP when…

• The client is happy to pay in GBP (their accounts team handles the FX on their end — less common in the US, more common in Asia)
• The contract is short and one-off — not worth the multi-currency overhead
• You want to fix your revenue in your home currency for forecasting
• You don't yet have a multi-currency account

For most UK freelancers with recurring overseas clients, the right answer is "invoice in the client's currency, receive into a multi-currency account, convert to GBP on your own schedule". The single decision unlocks better FX rates and gives you optional control over when conversion happens.

HMRC rules — converting foreign invoices to GBP for your accounts

Your UK accounting records must be kept in GBP. HMRC accepts two methods for converting foreign-currency invoices:

Method 1 — spot rate on the date of supply

For each invoice, use the live exchange rate on the day you raised the invoice (the tax point). More accurate but more work. You'd typically use the Bank of England's published daily spot rate, or your accounting software's automatic rate (most pull live rates from Reuters / ECB / similar).

Method 2 — HMRC's monthly average rate

HMRC publishes monthly average exchange rates you can use for all transactions in that month. Simpler — you use one rate per month per currency rather than checking 30+ daily rates. Slight inaccuracy on individual transactions but evens out across a year.

Pick one method per VAT registration period and stick with it. Switching methods requires HMRC notification. Most small freelancers default to the monthly average; larger businesses with significant FX exposure use the daily spot rate for more accurate gain/loss accounting.

VAT and foreign currency invoices

If you're VAT-registered, the rules layer in:

• B2B overseas client (the usual case): place of supply is the client's country, you don't charge UK VAT, you note "reverse charge" on the invoice. The invoice value (in the client's currency) goes in Box 6 of your VAT return — converted to GBP at either the spot rate or the HMRC monthly rate.
• B2C overseas consumer: the general rule says UK VAT applies (place of supply = supplier's country), so you charge 20% UK VAT on top of the foreign-currency amount. Digital services to EU consumers follow OSS rules — see the international VAT guide.
• UK VAT-registered client paying in foreign currency (rare): you must show the GBP equivalent of the VAT amount on the invoice using the published HMRC rate, so they can reclaim accurately. This is unusual but worth knowing.

Anatomy of a foreign-currency invoice

The format is the same as a normal UK invoice with three modifications. Use our invoice generator as a starting point. Required modifications:

1. Currency clearly stated

Every monetary line must show the currency symbol or ISO code (USD, EUR, SGD). Don't rely on the £ vs $ symbol alone — "$5,000" is ambiguous (USD vs AUD vs SGD). Best practice: "USD 5,000.00" or "$5,000 USD".

2. Payment instructions in the client's local rail

• For US clients: ACH routing number + account number (from your Wise USD details), or SWIFT BIC + IBAN as fallback.
• For EU clients: your EUR IBAN + BIC (from Wise EUR or a separate EUR account).
• For other clients: local equivalent + SWIFT details as fallback.

The point is to make it free for them to pay you. If they have to send a SWIFT wire because you only gave them GBP details, they'll pay £15-30 in wire fees + their bank's FX margin — which often comes out of your invoice as a "deducted intermediary fee".

3. Reverse-charge wording (B2B only, VAT-registered only)

VAT: 0.00 — reverse charge: customer to account for VAT
in their member state under Article 196 of Council
Directive 2006/112/EC.

For non-EU clients, a plain-English statement is acceptable: "VAT: 0.00 — outside the scope of UK VAT; customer responsible for any local sales tax / GST." See the reverse-charge explainer for variations by jurisdiction.

Bookkeeping flow — what actually happens

The typical end-to-end:

1. You raise an invoice in USD for, say, $5,000. Record date of supply (tax point).
2. Convert to GBP for your accounts using your chosen method (spot rate or HMRC monthly). If the spot rate on the day is 1 GBP = 1.27 USD, the GBP equivalent is £3,937.
3. Record in your books: £3,937 of sales, with a "USD 5,000 to be received" debtor balance.
4. Client pays in USD via ACH to your Wise USD account, 30 days later. Spot rate that day is 1 GBP = 1.29 USD. The USD 5,000 is now worth £3,876 if converted today.
5. Reconcile the FX difference: original invoice recorded at £3,937, current GBP value is £3,876 — a £61 unrealised FX loss. Most accounting software handles this automatically as a "currency adjustment".
6. You convert when ready: when you actually convert USD 5,000 to GBP via Wise (say at rate 1.28 a week later), you get £3,906. Final FX gain/loss is recorded against the £3,937 originally booked.

If this sounds complicated, it's because the bookkeeping is — but accounting software does all of it automatically. The key freelancer-side decision is just: pick a conversion method (spot vs monthly), stick with it, and let the software handle the rest.

Practical rules of thumb

• Bill in the client's currency by default for B2B contracts above £2,000. Below that the FX overhead isn't worth it.
• Use the HMRC monthly average rate if you have under 10 foreign-currency invoices/quarter. Use spot rates only if you have higher volume and your accounting software does it automatically.
• Convert to GBP on a monthly schedule, not invoice-by-invoice. Cheaper (fewer transactions) and removes day-to-day rate anxiety.
• Show GBP equivalent on the invoice for the client's reference if they ask — but the invoice currency is what's payable. Something like "USD 5,000.00 (~£3,937 at today's rate, payable in USD)" is helpful and HMRC-compliant.
• Use FreeAgent / Xero / QuickBooks for foreign-currency tracking. Spreadsheets work for very low volumes but get painful fast.

General guidance on foreign-currency invoicing for UK freelancers. Not tax advice. For complex multi-currency situations, partial exemption, or HMRC currency-method changes, consult a qualified accountant.