Regulatory updates - United Kingdom

HMRC has detailed its “digital by default” approach in their transformation roadmap. While the roadmap encompasses making tax and customs systems modernized and fully digital, a focal point also addressed in this context is e-invoicing.

Building on the progress made by the MTD scheme (Make Tax Digital), the UK’s proposed introduction of e-invoicing is part of a broader strategy to address issues associated with non-compliance related to tax matters. HMRC and DBT have collaborated on increasing the adoption of e-invoicing in the private and public sectors.

The responses to the public consultation released by both HMRC and DBT that closed in May 2025 will be used to direct the approach the UK will take regarding widespread adoption of e-invoicing.

On February 13, 2025, the UK took yet another step towards implementing e-invoicing across the country, as the public consultation was launched, and the open consultation document was published.

The public consultation document addresses the main benefits of an e-invoicing system while keeping the outlook on how such a system should look open. The document underlines the importance of establishing common e-invoicing standards to facilitate trade and for business systems to effectively interact with each other. Furthermore, it underlines that increased adoption of e-invoicing may improve productivity, cashflow, simplify tax reporting, and reduce the tax gap.

As part of the agenda to increase adoption rates, these initial stages will therefore focus on open policymaking and strong engagement, as the HMRC (His Majesty's Revenue and Customs) and DBT (Department for Business and Trade) seek opinions into four broad areas:

• Models of e-invoicing, infrastructure and format;
• Whether e-invoicing should be mandated or voluntary;
• Which actors should be in the scope of a mandate;
• Whether e-invoicing should be complemented by real-time digital reporting.

The consultation will guide future decision-making

The HMRC and DBT emphasize that the responses aim to inform future decision-making, and no timelines or actions following the public consultations are announced at this stage.

How to participate in the consultation

Stakeholders participating in the consultations may send responses either through the official public consultation form or via e-mail to: einvoicingconsultation@hmrc.gov.uk, no later than May 7, 2025.

The UK government is taking a significant step toward modernizing its tax system by introducing e-invoicing, as announced by Chancellor Rachel Reeves. This new reform is part of the broader Digital Transformation Roadmap, with full implementation expected in 2025. The goal is to simplify financial processes for businesses and improve tax compliance across the country.

A public consultation will be launched soon to gather feedback from businesses on how best to implement e-invoicing. This will help ensure a smooth transition as the government prepares to make e-invoicing the standard process across private companies and government departments.

This initiative, set to roll out in spring 2025, is part of the government's effort to close the tax gap and enhance compliance. The details of the new e-invoicing framework will be finalized in the upcoming Digital Transformation Roadmap, outlining the vision for a more efficient and digital-first tax system.