E-invoicing in the UK: what it is and how it works

What e-invoicing actually means

E-invoicing is the exchange of invoice data between the supplier's and the customer's software in a structured, machine-readable format. In HMRC's words: issued, transmitted and received in a format that allows automatic processing. Nobody retypes anything.

That rules out the PDF. A PDF is a picture of an invoice: someone opens it and keys the figures in. HMRC still accepts PDFs for VAT records, but under the 2029 mandate an emailed PDF will not count.

It is also not the same as online invoicing, which simply means creating invoices in a web app instead of Word or Excel.

How e-invoicing works: four steps

The UK has chosen a decentralised "four-corner" model on the Peppol network, with no government portal in the middle.

1. You create the invoice in your invoicing software, as today.

2. Your software's access point (an accredited service provider) converts it into the standard format and validates the mandatory fields.

3. The network routes it to your customer's access point, addressed by their business identifier – typically their VAT number.

4. The customer's software imports the data, matches it to the order and schedules payment.

HMRC does not receive a copy; real-time reporting is not part of the 2029 launch.

Formats used in the UK

• EN 16931 – the European standard for the core data of an e-invoice, adopted as BS EN 16931. Public bodies must accept invoices in this form.

• Peppol BIS Billing 3.0 – the Peppol implementation of EN 16931, exchanged as UBL XML. NHS England suppliers already use it, and in June 2026 the government confirmed Peppol as the core network for 2029.

• EDI and PDF – still accepted by HMRC for VAT purposes today if all required data is present.

UK-specific technical rules are due at Budget 2026.

What the law requires today

HMRC's rules for electronic VAT invoices (VAT Notice 700/63) apply whichever format you use:

• Your customer must agree to receive invoices electronically.

• You must ensure authenticity of origin, integrity of content and legibility – via an electronic signature, EDI, or business controls linking the invoice to the order.

• Same details as a paper VAT invoice: sequential number, tax point, your VAT number, VAT rate and the VAT total in sterling.

• You do not need to notify HMRC.

• Keep every invoice issued and received for 6 years – see our tips on digital invoice archiving.

When e-invoicing is mandatory

• Public sector (B2G): since 24 February 2025 the Procurement Act 2023 requires public bodies to accept and process undisputed EN 16931 e-invoices. NHS England suppliers must already use Peppol.

• Business to business (B2B): voluntary today.

• From 1 April 2029: every VAT invoice, B2B and B2G, must be an e-invoice. Sales to consumers are outside the mandate.

The EU's ViDA reforms do not apply in the UK, though EU customers may already ask for structured invoices.

Benefits and risks

Benefits

• Faster payment: the invoice lands in the customer's system the moment you send it.

• Fewer errors and lower cost: no retyping, fields validated before sending. HMRC cites industry estimates of 60–80% lower invoicing costs.

Risks

• Your customer needs an access point too, or the invoice goes nowhere.

• A wrong VAT number or Companies House number can get the invoice rejected automatically.

• The 6-year record-keeping duty stays with you, not your provider.