e‑Invoicing UK: What businesses need to know from HMRC’s 2025 roadmap

In HMRC’s latest Transformation Roadmap, (21 July 2025), the department reaffirmed its commitment to delivering a digitally advanced, data-driven tax system. Among its priorities is e‑invoicing UK, not yet mandated, but widely adopted globally and now under active review in the UK.

This follows the earlier joint consultation led by HMRC and the Department for Business & Trade, which ran from 13 February to 7 May 2025. It explored how best to promote and potentially standardise e‑invoicing across both the public and private sectors. It explored how e‑invoicing could reduce admin, improve reporting accuracy, and prepare the UK for future tax digitisation. Although not yet mandatory, the government’s direction is clear.

As specialists of forward-thinking Cloud Accounting and Accounting Solutions, we explore what e-invoicing UK means, how businesses can prepare, and how software platforms like Xero are already enabling it.

What is e‑invoicing UK?

Electronic invoicing (e-invoicing), is the process of sending and receiving invoices in a structured, electronic format, rather than relying on PDFs or paper-based invoices. Formats such as XML or UBL are commonly used and integrate directly into accounting software, without human intervention. While PDFs, invoices may appear digital, they still require manual data entry. E‑invoices, by contrast, are fully integrated, enabling seamless transmission and immediate processing, with fewer errors, and improved audit trails.

E-invoicing is already standard practice across much of Europe, with countries such as Italy and Poland mandating it as part of real-time reporting and tax compliance. While the UK hasn’t committed to a mandate, adoption is under review, and businesses that embrace this shift early, stand to gain increased efficiency, accuracy, and improved cash flow visibility.

The consultation and why it matters

The government consultation, which closed in early May 2025, sought input from across the business and accountancy sectors on how the UK could encourage wider uptake of e‑invoicing. It considered a number of key themes, including whether any future rollout should be voluntary or mandatory, whether a centralised or decentralised exchange model would be more appropriate, and which technical standards should be adopted.

Professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Taxation (CIOT) welcomed the proposals but called for flexibility. These responses stressed the importance of compatibility between systems, government-led education, and the need to align with global frameworks such as Pan-European Public Procurement On-Line (PEPPOL), to ensure compatibility with international trading partners. Ellen Milner, CIOT Director of Public Policy, confirmed:

‘If the UK government desires greater adoption of e-invoicing without mandating its use, HMRC will need to consider a package of options to encourage voluntary adoption.

‘This may include an educational and training campaign, financial incentives, providing a better business experience, effective implementation and systems that instil confidence to move along the digital journey.’

While there is no current mandate, the inclusion of e-invoicing UK in both the consultation and roadmap suggests policy is likely to follow. Businesses that act early will be better positioned for the transition.

The digital direction: Why e‑invoicing UK matters now

Attention remains on Making Tax Digital (MTD), for VAT and Income Tax Self Assessment (ITSA), but HMRC’s Transformation Roadmap, makes clear that wider digital reform is underway. E‑invoicing UK is emerging as a significant area of focus.

Positioned as a natural extension of HMRC’s digital strategy, e‑invoicing UK offers clear advantages for both businesses and HMRC. Structured invoice data can reduce admin, eliminate manual errors, speed up payment cycles, and improve real-time visibility of transactions. This contributes to a more efficient, and transparent tax environment.

The inclusion of e‑invoicing UK in both the government’s roadmap and the earlier joint consultation with the Department for Business & Trade suggests that momentum is building. Businesses that start preparing now will be better placed to adopt this evolving digital infrastructure.

As seen in other jurisdictions, such as the EU, early adoption of e‑invoicing has led to faster payments, reduced fraud, and significant cost savings. These are benefits the UK government is keen to replicate, and businesses that prepare now will be best placed to benefit.

How Xero and other cloud software are preparing

Cloud-based software is evolving to meet future reporting needs. Xero has already introduced e‑invoicing functionality in several countries and is preparing for similar adoption in the UK. Through its PEPPOL-compliant infrastructure, users can send and receive structured e‑invoices securely and in real-time, making compliance with future UK standards far more straightforward.

Using Xero for e‑invoicing allows businesses to automate invoice delivery, reduce duplication, and streamline their VAT treatment processes. This is especially useful for organisations with cross-border clients or public sector contracts, where compliance with digital standards is increasingly expected. Other providers such as Sage and QuickBooks are also actively developing their capabilities, with feature rollouts expected in line with HMRC’s evolving position.

If you’re already using cloud software, you may have the tools in place to begin e‑invoicing immediately. The key is understanding how these functions work and integrating them into your existing workflows, this is where Rayner Essex can help.

Preparing your business for e‑invoicing

The benefits of e-invoicing UK are clear, even before any mandate. Businesses should assess whether their accounting systems support structured invoicing and whether workflows need updating.

Those working with public sector organisations or international clients may already need to meet digital invoicing standards. Getting ahead now will reduce disruption later.

Preparing also includes reviewing training, updating internal processes, engaging suppliers and ensuring systems can handle structured invoicing data. These steps take time, and this is where speaking to your accountant or software provider can help.

Starting early, may also uncover process improvements that benefit your business immediately, even before any formal requirements take affect.

Supporting your digital transformation

At Rayner Essex, we work with businesses of all sizes to implement the right digital systems that support growth, compliance, and financial visibility, tailoured for your business in mind. Our Cloud Accounting and Accounting Solutions teams can help you assess whether your software is e‑invoicing-ready, guide you through set-up and implementation, and offer advice and support needed to stay ahead.

If you’re unsure whether e‑invoicing is relevant for your business, or if you’d like to explore the benefits of adopting a structured, real-time invoicing solution, we’re here to help.

Get in touch

To learn more about e‑invoicing UK, software integrations, or digital transformation planning, speak to our tax, cloud or accounting solutions experts today.