The end of deliberation: UK mandates e-invoicing by 2029

Summary

• The news: The UK government has confirmed mandatory e-invoicing for all B2B and B2G VAT invoices starting in 2029.

• The model: A decentralised model has been selected, ruling out a centralised government platform.

• Compliance: Real-Time Reporting (RTR) will not be implemented in 2029 to ensure a smoother initial transition.

• Next steps: Stakeholder collaboration begins in January 2026, with a full technical roadmap to be published at Budget 2026.

The UK has officially ended years of deliberation on electronic invoicing. Following its consultation, the government has set a definitive course, confirming that e-invoicing will be mandatory for all VAT invoices starting in 2029.

This major decision, announced in the consultation outcome updated on 26 November 2025, signals a clear commitment to digital transformation, aiming to boost productivity, tackle late payments, and modernise tax compliance across the UK business landscape.

The journey to mandatory adoption

Why the UK government is modernising tax compliance

E-invoicing technology is not new to the UK. It has been used by the NHS and large corporations for years. However, the market suffered from low uptake and fragmentation. Crucially, the lack of a single shared standard meant that the benefits of automation were often limited, forcing businesses to run “dual systems”. For a deeper dive into the market complexities that preceded this announcement, read our previous interview.

A significant factor in this fragmentation is a widespread lack of awareness: many large corporations use software to create a structured invoice, but because they still download it as a PDF and send it by email, they do not classify their process as electronic invoicing. This reliance on the familiar PDF prevents them from achieving a fully end-to-end electronic approach and means the resulting document—though technically digital—offers none of the benefits of structured data. By contrast, using structured e-invoice formats significantly reduces digital waste, as these files are much smaller, require less processing power, and thereby minimise the carbon footprint of digital transactions.

Existing digital foundations (Making Tax Digital & NHS)

While a nationwide B2B e-invoicing mandate is new, the UK has two existing digital foundations:

• NHS e-invoicing: All businesses that invoice the NHS must be connected to a Peppol Access Point and send their invoices via the Peppol network. This established business-to-government (B2G) process provides a real-world, large-scale example of a successful decentralised model within the UK.

• Making Tax Digital (MTD): Introduced in 2019, MTD is the government’s phased approach to transitioning tax processes to digital reporting. While MTD is not e-invoicing, its core principle is similar: moving compliance and reporting to a digital process to give the government greater visibility. The successful, if phased, adoption of MTD has paved the way for the business and software landscape to adapt to a new digital mandate.

In February 2025, the government launched the consultation “Electronic invoicing: promoting e-invoicing across UK businesses and the public sector” to address these issues and gather views on how to achieve the critical mass needed for “network effects”. The response confirmed that without a mandate, the UK risked falling behind international peers who are already realising significant benefits, from 20% reductions in late payments to efficiency savings. In fact, international studies show that businesses adopting e-invoicing can reduce processing costs by up to 60%, translating into efficiency savings that yield a 2.2 times return on investment after 2 years for small firms.

Strategic policy decisions: Decentralised model and 2029 go-live

The government response, published on 26 November 2025, confirmed the policy interventions:

• Mandate: Mandatory for all VAT invoices, primarily business-to-business (B2B) and business-to-government (B2G) transactions where VAT is due (though not for business-to-consumer, or B2C, transactions).

• Go-live date: 2029 - a roadmap to implementing this mandate will be published at Budget 26.

• Model: The government has ruled out a centralised platform (like Italy’s SDI). Its design work will now focus on a decentralised model (such as the 4-corner Peppol model), which was the overwhelming preference of respondents. This focus aligns with UK business practices and fosters a competitive software market. However, the final technical model and standard are still pending confirmation.

• E-reporting (CTC): The government has decided not to implement Real-Time Reporting (RTR) alongside the mandate in 2029. This critical separation ensures that the 2029 deadline is solely focused on establishing the mandatory e-invoicing infrastructure.  Any RTR requirements will be considered and implemented at a later date, building upon the established e-invoicing infrastructure.

The international dimension: Peppol, PINT, and ViDA

The need for international alignment to support cross-border trade was a major concern raised by respondents, and it has heavily influenced the UK’s final approach.

The UK's model: Decentralised by design?

The government has confirmed its policy intervention but deliberately left the technical model open for the next phase of consultation. The vast majority of businesses and experts favoured a decentralised, 4-corner model (such as Peppol), citing its flexibility and key alignment with the UK’s existing MTD system.

The most critical element of the January 2026 collaboration phase will be finalising the required standard and ensuring interoperability with the rest of the world. Given this key government commitment to international compatibility, along with the NHS's successful adoption, the final standard is expected to be closely aligned with global frameworks like Peppol/EN 16931 to ensure compatibility with the wider EU ecosystem.

The ViDA question: Post-Brexit and beyond

The EU's VAT in the Digital Age (ViDA) proposal mandates Continuous Transaction Controls (CTC) via e-invoicing across the bloc by 2030, eliminating older reporting methods.

Although the UK is not legally subject to the EU's ViDA proposal, having left the European Union, its decision to mandate e-invoicing and potential focus on the Peppol framework - the same framework utilised by many ViDA member states - shows a pragmatic desire to maintain digital trade compatibility with its largest trading partner. This commonality minimises regulatory divergence for businesses that operate across both the UK and the EU.

What happens next?

The government has provided a clear roadmap for the design phase, emphasising collaboration over imposition:

1. Stakeholder collaboration: A period of extensive stakeholder engagement will launch in January 2026. This collaboration will involve software providers, tax advisors, and businesses of all sizes to co-design the final regime.

2. Implementation roadmap: The detailed Implementation Roadmap will be published at Budget 2026. This document will provide clarity on the final standards, technical specifications, and guidance required.

3. Support focus: HMRC and DBT are committed to ensuring the regime supports a competitive market that delivers low-cost, easy-to-use e-invoicing products for SMEs, directly addressing the concerns around initial cost and complexity.

The message is clear: the transition is no longer a question of if, but how. Businesses now have a multi-year window to plan for the necessary system upgrades and ensure they can leverage the efficiency, cash flow, and compliance benefits that mandatory e-invoicing will bring.

As the UK commits to its 2029 digital future, navigating the shift requires awareness of both domestic standards and global compatibility. To stay informed on the technical alignment between the UK’s new regime and global frameworks (including the EU’s ViDA) and to ensure your cross-border operations remain compliant, follow us on LinkedIn for expert analysis.