From 1 April 2029, all VAT invoices for business-to-business (B2B) and business-to-government (B2G) transactions must be issued electronically. This new requirement applies to all VAT-registered businesses, with an initial focus on B2B and B2G transactions—consumer invoices are not included. The government’s aim is to improve VAT accuracy and reduce the tax gap, supporting HMRC’s digital-first strategy under Making Tax Digital.
E-invoicing enables automated invoice exchange between businesses and tax authorities, regardless of the accounting systems used. The move to mandate e-invoicing aligns with the government’s broader strategy to reduce fraud and enhance real-time visibility of transactions through digitisation.
Benefits of E-invoicing
- Efficiency and Accuracy: E-invoicing improves efficiency and reduces processing errors.
- Cashflow and Compliance: It enhances cashflow through faster invoice payments, stronger VAT compliance, and smoother VAT reclaim processes.
- Reduced Late Payments: Government consultation suggests a 20% reduction in late payments.
Challenges and Impacts
Real-world experience from other countries shows that e-invoicing requires significant business process and finance transformation. Often, this involves additional IT investment, which may disproportionately affect SMEs and mid-market businesses. Organisations should begin factoring e-invoicing into strategic planning for finance and tax systems over the next four years.
What Government Needs to Do
To support businesses through this transition, government action is needed to:
- Clarify invoice standards, the scope of organisations required to comply, and rules for international and complex invoices.
- Consider tax incentives to encourage early adoption, as seen in Belgium.
- Aim to reduce the compliance burden and provide support throughout the transition.
- We will be in touch in the near future with updates as this progresses. Please do not hesitate to contact us should you have any questions.
The information provided in this guide is intended as a general overview to help readers understand the key measures introduced in the UK Budget 2025. It does not claim to be exhaustive and should not be relied upon as a substitute for tailored professional advice. If you have any questions or require specific guidance, please
speak to one of our experts.
