What businesses should know ahead of the 2029 changes

Many small businesses still appear unclear about the Government’s planned move towards mandatory electronic invoicing, with most reporting they have not seen guidance from HMRC ahead of the rollout.

At the Autumn Budget, Chancellor Rachel Reeves confirmed that from April 2029, all VAT-registered businesses will be required to issue invoices electronically as part of wider plans to modernise the UK tax system.

Despite the scale of the change, the announcement attracted relatively little attention at the time. There have also been concerns around the lack of a phased introduction for smaller businesses that may still rely on manual processes or older systems.

What the research found

Research commissioned by HMRC and carried out by IFF Research surveyed 800 SMEs across sectors including manufacturing, transport and business services.

The findings suggest there is still a significant knowledge gap around e-invoicing:

• 25% of respondents said they were not at all familiar with the term “e-invoicing”
• 69% said they had never used it
• 91% reported not seeing any HMRC guidance on the upcoming changes

That said, there is some nuance behind the figures.

The Association of Taxation Technicians pointed out that several businesses initially claimed not to use e-invoicing, but later described processes that actually met the definition. Those responses were later reclassified.

Some businesses are already using it without realising

Encouragingly, the research also showed:

• 59% of SMEs were at least somewhat familiar with e-invoicing
• 29% reported having used it previously

Among those already using e-invoicing software:

• Sage was the most commonly used platform at 46%
• Xero followed at 17%
• QuickBooks accounted for 9%

Only a small minority (around 5%) reported using no accounting software at all, although this was more common in manufacturing and construction.

Why this matters

For many businesses, the move to e-invoicing will probably feel less dramatic than it sounds, particularly if they already use cloud accounting software.

However, for others still relying heavily on spreadsheets, PDFs or manual invoicing processes, the change may require adjustments to systems and workflows over the next few years.

The wider direction of travel is clear. HMRC continues moving towards greater digital reporting and automation through initiatives such as Making Tax Digital, and e-invoicing forms part of that broader shift.

Final thoughts

Although April 2029 may still sound a long way off, these types of changes are usually easier to deal with gradually rather than leaving them until the last minute.

For some businesses, it may simply mean reviewing existing systems and checking they are compatible. For others, it could be the point where moving to proper accounting software becomes necessary.

Either way, understanding how your current processes work now will make future changes far easier to manage.

If you want to review whether your bookkeeping and invoicing systems are working efficiently for your business, please get in touch.

This may be of interest to you: Spotlight on: Making Tax Digital for Income Tax.