Budget 2025 contained two sentences that will eventually change how every VAT-registered business in the UK issues an invoice. Below is what has been announced, what has deliberately not been decided, and what it means if you run SAP Business One, Microsoft Dynamics 365 Business Central, or neither. We implement both platforms, so we have no particular product to sell you on the back of a regulatory deadline. This reflects the position as at October 2026.
What the government has actually announced
The commitment appears in the Budget 2025 document, published on 26 November 2025, under tax administration and simplification:
“E-invoicing – The government will require all VAT invoices to be issued in a specified electronic format from April 2029. The government will work with stakeholders to develop an implementation roadmap to be published at Budget 2026.”
Three things in that are worth separating out, because they are routinely run together.
April 2029 is a firm date. It is roughly two and a half years away at the time of writing, which sounds comfortable until you consider that a version upgrade or a master-data clean-up takes months rather than weeks, and that you will want to be working normally well before the deadline rather than on it.
It applies to VAT invoices. HMRC’s response to the e-invoicing consultation, published the same day, notes that VAT invoices “are typically issued for business to business (B2B) and business to government (B2G) transactions where VAT is due (though not for business to customer transactions)”. Sell only to consumers and most of what you issue sits outside this; sell to other businesses or the public sector and you are in scope. The same document says “requiring all VAT invoices to be issued and received electronically will help to drive this change” — so receiving is part of the picture too.
The format has not been specified. “A specified electronic format” is a placeholder. The detail is expected in the implementation roadmap at Budget 2026, due on 28 October 2026, which is the most useful thing to wait for before spending money on this.
What the consultation settled, and what it left open
HMRC consulted on e-invoicing between February and 7 May 2025 and received 342 responses. Two outcomes matter for planning.
The first is the model. The response confirms that “the UK has focused its work on understanding how a decentralised model of e-invoicing would benefit the UK, and this position has not changed following the consultation responses.” Sixty-three per cent of respondents agreed with that focus.
In plain terms, a decentralised or “four-corner” model means your invoice travels from your system, to your service provider, to your customer’s service provider, to your customer’s system, with an agreed format and addressing scheme making the handover work. It is closer to email than to a government portal. The alternative, used in Italy among others, routes every invoice through a central state platform for clearance first; the UK is not currently heading that way.
The second is reporting, and here nothing is settled. The consultation explored “whether e-invoicing should be complemented by real-time digital reporting”, and the response discusses it at length without committing. This is the open question with the biggest consequences: sending invoice data to HMRC as it is raised sets a far higher bar for getting it right first time than a quarterly VAT return ever did.
Structured e-invoicing is already live in parts of the public sector. Bodies covered by the Public Procurement Act 2023 must accept e-invoices complying with the BS EN 16931 standard, and NHS Supply Chain requires suppliers to issue e-invoices through the Peppol network. If you sell to the NHS, you have met some of this already.
Why this is not a PDF problem
The most common misreading of the announcement is that it is about emailing invoices rather than posting them. It is not. An e-invoice here is structured data — a machine-readable file with defined fields that the recipient’s system can book without anyone retyping it. A PDF attachment, however neat, is a picture of an invoice.
That is why this lands on your business systems rather than your finance team’s habits. The data has to exist properly in the system that raises the invoice: the customer’s identifier, their VAT registration, correct tax codes, line-level detail, quantities and units of measure. Anything typed into a template by a person becomes a point of failure.
If you run SAP Business One
SAP Business One already has an electronic document framework, and Peppol runs on top of it. SAP’s documentation states that “Peppol builds on the standard setup of SAP Business One infrastructure for the processing of electronic documents,” and that both Sales – A/R and Purchasing – A/P marketing documents are supported, including invoices, credit memos and debit memos.
Outbound, you raise an A/R invoice as normal; the system treats it as an electronic document, shows its processing status on the document, and lets you manage it from the Electronic Documents Monitor. Inbound invoices arrive through the Electronic Document Import Wizard, managed by SAP Document and Reporting Compliance, cloud edition. One caveat from SAP’s documentation: orders and deliveries can form part of the Peppol exchange process, but “these documents are not supported currently by SAP Document and Reporting Compliance, cloud edition.”
For most SAP Business One users, then, this is a configuration and subscription exercise rather than a development project — but it depends on your version and on the compliance service alongside it. If you have deferred upgrades for a few years, look at that first. Our integration work and support service both start from the same question: what version are you on, and what does it support.
If you run Business Central
Business Central has an E-Documents framework covering the same ground. PEPPOL BIS 3.0 is one of two document formats available by default in the electronic export setup, the other being Data Exchange for defining a format yourself.
The gap worth understanding is the network connection. Microsoft’s setup documentation notes that in that setup the Service Integration field offers only “No integration” at present — so the connection to a network such as Peppol comes from an extension rather than the base product. That extension may be a country localisation or a partner connector; Microsoft’s 2025 release wave 2 plan, for instance, includes a ForNAV Peppol connector for e-documents.
Business Central takes two major updates a year, so UK-specific functionality will arrive through that cycle — an argument for staying reasonably current rather than several releases behind, a position some businesses have drifted into without deciding it. Our Business Central page covers how we work with the platform, and our comparison of the two sets out where each tends to fit.
If you are on accounting software or spreadsheets
If your invoicing is straightforward and comes out of Xero, QuickBooks or a current Sage product, your software provider will almost certainly handle this for you. HMRC has said it “will work closely with the software sector, including Making Tax Digital (MTD) providers” on exactly that. The businesses with a genuine problem are the ones where invoices are assembled outside the finance system: a spreadsheet of monthly charges, a schedule exported from a project tool, applications for payment from a site, a rebate calculation done by hand each month. Those invoices exist as documents, not as data, and a structured format exposes that immediately — which overlaps closely with the signs a business has outgrown its accounting software. The direction of travel is familiar from Making Tax Digital for Income Tax: HMRC moves towards structured data submitted from software, and the businesses that struggle are the ones whose records live between systems.
What to do in the next twelve months
- Establish your scope. What proportion of your sales invoices are B2B or B2G with VAT due?
- Count the invoices your system does not raise. Each one assembled outside your finance or ERP system is work for 2028. Listing them takes an afternoon.
- Look at your master data. Customer records, VAT numbers, addresses, tax codes, units of measure. Structured invoices fail on inconsistent data in a way PDFs never did.
- Ask the same of purchase invoices. Receiving is the half most people ignore, and where most of the efficiency sits.
- Check your version, then wait for the roadmap. On both platforms this assumes a reasonably current release — but neither the format nor the phasing is public yet, so commit no budget before the Budget 2026 roadmap.
- Do not let this alone drive a system replacement. If you were already close to changing systems, it is a reason to get on with it. On its own, it is not a business case.
Where we sit on this
Expect April 2029 to be used as a closing argument over the next two years. It is a real deadline and it will require real work, but it is a compliance requirement that both major mid-market platforms already have a mechanism for, and that most accounting packages will absorb. It is not, by itself, a reason to buy a new ERP system. What it is good for is forcing a conversation most finance teams need anyway: whether the data behind your invoices is clean enough to stand being read by a machine.
If you would like an assessment of where your systems stand against this — on either platform, or on neither — book a free consultation. We will tell you if the answer is that you have nothing to do yet.