e-Invoicing is coming

Business owners may have noticed a little publicised announcement in the Autumn 2025 Budget that e-invoicing of B2B services will become mandatory for all VAT registered businesses.

What:

An e-invoice is a VAT Sale Invoice in a structured electronic format, so that the key invoice data can electronically transfer from one accounting system to another.

How:

By using specially compliant software. All existing book keeping software providers are expected to incorporate this feature into their future releases (Xero already have a solution).

When:

wef April 2029 (The Government have said they will publish a detailed roadmap this year).

Why:

To continue the Making Tax Digital initiative and further modernise the UK tax system (avoiding manual re-entry of data), improve efficiency, and reduce the tax gap (see below).

But beware, some other European countries (including Italy, Hungary & Greece) have already introduced similar, plus the requirement for this new electronically transmitted sales invoice to be routed via the tax authority; referred to as real time VAT reporting. So perhaps we should expect this second step here also. Although, perhaps not unsurprisingly, there does seem some correlation between countries introducing this requirement and those with the biggest VAT tax-gap:

Biggest: Romania (30%), Italy (15%), Greece (12%),

UK (5%)

Smallest: Austria (1%), Finland (3%),Cyprus (3%)

So perhaps we will be spared?

Disclaimer - All information in this post was correct at time of writing.