Budget 2025 announced all VAT invoices must be issued as an e-invoice from 2029. VAT invoices are typically issued for business to business (B2B) and business to government (B2G) transactions where VAT is due (though not for business to customer transactions). The government is committed to supporting effective digital transformation across UK businesses, requiring all VAT invoices to be issued and received electronically will help to drive this change. To develop a regime which addresses the needs of diverse business communities, we will continue to engage extensively with stakeholders on the policy design. We will publish an implementation roadmap at Budget 2026 to give businesses and their advisors clarity and certainty of what to expect.
What is E-invoicing
E-invoicing refers to the digital exchange of invoice data directly between buyers’ and suppliers’ financial systems, even when those systems differ. This process enables invoices to be automatically integrated into the buyer’s system, reducing the need for manual processing and improving efficiency.
Invoices in the following formats are not considered e-invoices for the purpose of this consultation: invoices in PDF or word formats, images such as JPEG, HTML invoices on a webpage or in an email, OCR or images sent via a fax machine.
Why did the government consult on increasing the uptake of e-invoicing?
E-invoicing technology has been in use globally for over 2 decades, with an increasing number of countries, including Italy, Brazil and Chile mandating its use for certain types of transactions. E-invoicing is used in the UK at present; however uptake is relatively low, and lack of clear standards has resulted in a fragmented market, reducing the benefits of using e-invoicing. Several software providers already provide e-invoicing services in the UK and increased international adoption, particularly in the EU, means that there are more products coming to market which can accommodate a wide range of business needs.
Adopting e-invoicing can help businesses to operate more efficiently, reduce the number of late payments received, and reduce the number of errors that businesses make in their tax returns. As more jurisdictions move to this technology, the UK risks being left behind as standards are developed and businesses in other countries take advantage of the efficiency and productivity benefits it offers. Understanding attitudes to e-invoicing, its potential to improve business processes, and the real and perceived barriers to adoption is crucial for developing the policy interventions required to encourage uptake in the UK.
