Budget 2025 – mandatory e-invoicing by 2029

Budget 2025 – mandatory e-invoicing by 2029

In a move that is likely to catch companies off guard, all VAT invoices will have to be produced using an electronic format.

The move to mandatory e-invoicing is designed to modernise the tax system the government has said and from April 2029 businesses will be required to issue all VAT invoices as ‘e-invoices’.

This mandatory change was announced in the Budget Red Book without much fanfare from the Treasury or HMRC, the policy was only included in a few lines of Budget documents, although it could massively affect many businesses.

The use of e-invoicing for all VAT invoices will be required for all business-to-business (B2B) and business-to-government transactions.

The government consulted on these changes earlier in the year and now plans to work on an implementation roadmap which will be ready by the budget later in 2026.

The Treasury believes that this will improve how HMRC uses information from third parties and will help to build new technology to help taxpayers avoid errors when submitting VAT returns.

This represents a major change in both scale and pace. Many businesses will simply not have the systems or capacity in place to comply without significant investment. Whether the UK’s ambitious timetable proves achievable in practice remains to be seen.

E-invoicing is becoming increasingly popular across the world in the last few years, with Malaysia being the latest country to go-live with mandatory e-invoicing in August 2024. It will be mandatory across the EU from 2030.

Spain will be launching their system in 2027, while Italy has had mandatory e-invoicing since 2019.