Executive summary

On 26 November 2025, as part of the United Kingdom (UK) Budget 2025, the Government confirmed its intention to implement mandatory e-invoicing in the UK, requiring all value-added tax (VAT) invoices to be issued in a specified electronic format from April 2029 (covering business-to-business and business-to-government transactions). (For details on the new budget, see EY Global Tax Alert, UK introduces Budget 2025, dated 2 December 2025.)

The Government will continue to work closely with businesses, representative bodies, tax professionals and software providers to develop the detail of the UK's VAT e-invoicing regime.

An implementation roadmap is expected to be published during the UK Budget 2026.

In the meantime, businesses operating in the UK should consider readiness planning, including providing input to the next phase of Government consultation, which will begin in January 2026. Longer-term strategies should also be considered, including data readiness, once the UK requirements are announced in full. Stakeholder management, budget approval and technology selection will be key aspects of any successful implementation strategy.

For multinational enterprises, continuing to meet e-invoicing requirements for countries going live imminently will also be important.

Key themes from the UK consultation response document

The consultation response document was also published at the end of November as part of the UK Budget: Promoting electronic invoicing across UK businesses and the public sector.

There were a total of 342 responses from businesses, representative bodies and individuals. The Government recognizes that although e-invoicing technology has been available in the UK for some decades, take-up has been relatively low. With countries across the globe implementing e-invoicing, the UK is keen to follow suit with benefits including reducing the VAT gap and moving it closer to the Government's digitalization ambitions.

Respondents broadly recognized the potential benefits of e-invoicing, including improved efficiency, faster approval workflows, cost savings and greater transparency. E-invoicing was also viewed as a tool that could strengthen compliance, reduce fraud and modernize financial operations through digital transformation.

Overall, respondents supported mandatory e-invoicing rather than a voluntary mandate, which is seen as likely to limit overall adoption. However, small and medium-sized enterprises highlighted the need for low-cost, easy-to-use solutions.

Potential challenges with implementing e-invoicing included different standards across systems, integration challenges with existing or legacy systems and unclear policy requirements. Accordingly, a significant proportion of respondents called for the adoption of common formats that are already in use in the UK and European Union (EU), recommending alignment with international frameworks such as the Pan-European Public Procurement On-Line (PEPPOL) framework allowing system compatibility across borders and platforms, with its international reach making it a strong choice for interoperability.

The majority of respondents favored the implementation of a decentralized e-invoicing model (i.e., businesses exchange e-invoices directly through their chosen software providers), as opposed to a centralized model (i.e., e-invoices are submitted to a centralized government platform for validation before being forwarded to the buyer).

A decentralized model was favored due to its flexibility, scalability and alignment with existing UK business practices. Further, the decentralized four-corner model was praised for its interoperability and compatibility with international frameworks like PEPPOL and the EU's VAT in the Digital Age (ViDA) initiative. Respondents valued the decentralized model's ability to integrate with current systems and foster innovation without reliance on central infrastructure.

In addition to international alignment, respondents called for simplicity and consistency in implementation, highlighting the importance of user-friendly software, common data fields, and integration with existing accounting systems to reduce errors and improve auditability.

One key theme that respondents expressed was the need to provide clear guidance with a sufficient lead in time before a mandate takes effect including ample notice of standards. The Government considers that setting the implementation of a mandate in 2029 allows sufficient time both for policy co-design with stakeholders and notice of the final regime. Further, publishing a roadmap as part of Budget 2026 will give businesses a clear pathway supporting long-term planning.

The Government will continue to explore the potential benefits of real-time reporting (RTR) but will not introduce it alongside the e-invoicing mandate in 2029, the consultation response document indicates.

The Government recognizes that e-invoicing data alone would not be sufficient to produce a prepopulated VAT return, though e-invoicing data might be helpful to feed into such a product should it be developed in the future.

Next steps

Businesses should consider participating in the next phase of consultation, particularly if they anticipate sector complexities and concerns. Longer term, once the UK's technical specification has been published, businesses will need to understand any data challenges and gaps, as well as select technology that best meets the UK's e-invoicing requirements and the needs of the business. As with any new requirements, the key to success will be a coherent strategy that engages appropriate stakeholders (tax, finance and IT) early in the process.

More broadly, with other significant markets going live with e-invoicing in 2026, including Belgium, Poland, France and Greece across Europe alone, businesses operating in these jurisdictions will need to make sure they have appropriate technology in place to submit and receive invoices in line with the country-specific rules. Failure to do so will mean being unable to issue and receive invoices in these jurisdictions.