e-Invoicing in the UK - Complete Guide

If you own a UK business or will be trading here in the UK, you’ll need to know about invoicing practices and rules.

In this guide, we’ll be looking at e-invoicing in the UK. Electronic invoicing is becoming more common in many countries, and there are even rules about when you need to use it.

So read on for everything you need to know about UK e-invoicing, including legislation and how to send your first digital invoice.

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e-invoicing UK - An overview

In the UK, e-invoicing isn’t mandatory for B2B (business-to-business) transactions. This means you can invoice your clients and customers in whatever format you choose, based on an agreement between you.

However, there is e-invoicing UK legislation relating to public bodies. HMRC rules stipulate that electronic invoicing systems must be used for any payments to and from public entities (such as the NHS, government departments or local councils).¹

There are additional rules that must be followed, especially if you choose to adopt e-invoicing as a private business involved in B2B sales activities. These include the following:¹

• You can only use one system, so cannot issue both paper and electronic invoices for the same supplies or for the same customers
• The customer must agree to receive e-invoices
• The invoice can be either a structured format such as XML, or an unstructured format such as a PDF. For either, the invoice must be clearly legible
• Steps must be taken to ensure the authenticity of the e-invoice, including certified electronic signatures or use of electronic data interchange (EDI) systems

If you can’t meet HMRC requirements, you may be liable to pay a penalty.²

How to e-invoice in the UK?

Before you can send an electronic invoice, you’ll firstly need to know what information to include. Here’s what should be included on every e-invoice, according to HMRC’s rules for tax invoices:²

• An identifying document number
• The date the goods or service was supplied
• The date the invoice document was issued
• Your name, address and VAT registration number (if registered for VAT)
• The name and address of the customer
• A description of the goods or services supplied
• The unit price
• The quantity of the goods or extent of services
• The rate of VAT (if applicable)
• The amount payable, excluding VAT - this can be given in any currency
• The rate of any discount offered
• The total amount of VAT chargeable in GBP (if applicable)

To send an e-invoice, you’ll need to first choose a format and a system which meets HMRC requirements.

The most important of these requirements is ensuring the integrity and authenticity of the document. This can be achieved with the use of certified electronic signature software.

Both you and your client could also agree to use EDI (electronic data interchange) software. This involves a computer-to-computer exchange of structured data, so that invoices can be automatically processed by the recipient.

UK e-invoicing - FAQs

Still have a question about electronic invoice systems in the UK? We’ll tackle some of the most commonly asked questions below.

Is electronic invoicing mandatory in the UK?

E-invoicing is only mandatory in the UK if you’re working with a public organisation. It’s not a legal requirement for B2B businesses. You can choose to use e-invoicing as a private business selling to other private businesses, but you’ll need to make sure you meet HMRC’s requirements.

What are the requirements for e-invoicing?

One of the most important HMRC requirements for e-invoicing in the UK is ensuring the authenticity of the document. This means taking steps to prevent information on the invoice being altered, and being able to guarantee where the document came from.

HMRC recommends the use of advanced digital signature technology, or the use of electronic data interchange (EDI) systems for automatic processing of invoices. You must also ensure that e-invoices are legible, and contain all the same information as a paper invoice.

What is the process of e-invoicing?

An electronic invoice can be sent simply by email, through accounting software or electronic data interchange (EDI) systems. HMRC has guidance on e-invoicing available here.

What does an e-invoice look like?

An e-invoice can be a PDF or an XML spreadsheet. If a PDF, if it will look similar to a paper invoice. If it’s in XML form, it’s usually designed for automatic processing so will look quite different to standard paper invoices.

How do I create an e-invoice for the first time?

Your best bet as a newcomer to e-invoicing is to use accounting or other software. Alternatively, you can contact HMRC or an accountant for guidance.

What is the difference between an e-invoice and a normal invoice?

An e-invoice is a digital version of an invoice document, which is submitted and processed electronically. A normal invoice is usually in paper form, and requires manual processing and filing.

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After reading this guide, you should hopefully have a better understanding of electronic invoicing rules and requirements in the UK.

If your business only deals in B2B, it’s not mandatory to get on board with e-invoicing - although there are many benefits, including improved speed, efficiency, accountability and reducing the risk of human error.

But if you deal or sell to public entities, it’s crucial that you get to grips with e-invoicing as soon as possible - or you could incur penalties or other action from HMRC.

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Sources used for this article:

1. Spendesk - E-invoicing regulations in Europe & the UK for 2024 & beyond
2. GOV.UK - Electronic invoicing (VAT Notice 700/63) guidance

Sources checked on 30-04-2024.