E-Invoicing: What UK Businesses Need to Know

Following the Autumn Budget, HMRC has confirmed that digital record-keeping remains a priority, with e-invoicing expected to play a much larger role in the coming years. For some organsiations, especially those already using cloud accounting, this won’t present a major change. However, for others, particularly those who rely on handwritten invoices, spreadsheets or cash-based workflows, it will mean rethinking how invoices are created, stored and shared.

E-invoicing has been around for some time. Currently 80+ countries actively use this system, and the EU is planning an EU-wide requirement by 2030. In the UK it remains voluntary for most businesses, though public bodies such as the NHS already mandate it. HMRC’s next step is to standardise the process for the private sector and progress towards a system where invoices are submitted to HMRC automatically.

E-invoicing replaces manual invoices with a digital format, such as a PDF, sent electronically to the client, where it is automatically logged. The aims are simple: fewer errors, faster processing and cleaner, more consistent financial data.

What HMRC Will Do Next

In a recent consultation, HMRC outlined three possible models for e-invoicing in the UK:

• A four-corner model – supplier and buyer each use a certified software provider to exchange invoice data.
• A centralised model – invoice data goes to an approved intermediary that validates and time-stamps submissions.
• A data-sharing model – invoice data flows directly from the business’s accounting system to HMRC whereupon each one is digitally signed before going on to the customer.

It’s Part of Making Tax Digital (MTD)

HMRC views e-invoicing as an essential part of Making Tax Digital rather than a standalone initiative. It is widely understood that e-invoicing will be introduced voluntarily initially.  If you’re already keeping digital VAT records, you won’t notice much change. 

The Current MTD timeline is:

April 2026 – will roll in self-employed individuals and landlords with gross income over £50,000 

April 2027 – will see those with income over £30,000 added

April 2028 – the final step will see it extend to those with income over £20,000

Businesses dealing largely in cash transactions will see the biggest operational shift over time, as handwritten invoices and notes will ultimately need to be replaced with digital records created and stored through compliant software.

The government standardised digital invoicing will lower error rates and improve the consistency of reported data.  For smaller businesses, there may be new software costs and process changes to manage – meaning early preparation will be important.

Right now, there are no compulsory charges to implement, and HMRC will begin with voluntary adoption. However, this will be the new direction of travel and preparing early will give you time to deliver a smoother transition. Here’s what you should do now:

• If you are still using handwritten or informal invoices, it’s time to phase them out.
• If you are already using software or planning to make that jump soon, make sure it will support e-invoicing
• If you are still using cash transactions, investigate how you can convert these to a digital system

We’re here to help you prepare and make this transition as easy as possible. If this is pertinent to the way you are currently running your business, we’d advise you to contact us to discuss the best way forward. 

Get in touch with us at Accurox for expert support navigating these changes.