The government has launched a 12-week e-invoicing consultation on plans to cut paperwork for businesses.
UK businesses are being invited to have their say on the government's electronic invoicing (e-invoicing) proposals. E-invoicing is the digital exchange of invoice information directly between buyers and suppliers.
According to the government, e-invoicing could help businesses to:
- Reduce invoicing errors.
- Cut down on paperwork.
- Speed up payments.
- Improve cash flow.
- Reduce fraud risk.
- Improve the accuracy of VAT returns.
"E-invoicing simplifies processes, reduces errors and helps businesses to get paid faster. By cutting paperwork and freeing up valuable time and money, it will help improve firms' productivity and their ability to grow and succeed." James Murray, exchequer secretary to the Treasury.
Plan for change
The proposal forms part of the prime minister's Plan for Change for a tax system that supports economic growth. Examples of where e-invoicing has improved cash flow include:
- Australian government agencies now pay their suppliers within five days compared to 20 days for other forms of invoices.
- A UK NHS trust where e-invoices are ready for processing within 24 hours, compared to ten days under paper invoicing. Their e-invoices are typically paid almost twice as quickly as paper invoices, with supplier queries reduced by an average of 15%.
According to a report published by accounting software provider Sage, e-invoicing streamlines routine tasks like data entry and tax filing, driving annual productivity gains of around 3% in the UK. Sage is one of the providers of software for HMRC's Making Tax Digital (MTD) programme.
Have your say on electronic invoicing
The 12-week consultation, Promoting electronic invoicing across UK businesses and the public sector, was published on 13 February 2025 by HMRC and the Department for Business and Trade (DBT). The deadline for comment is 7 May 2025. HMRC and the DBT want to hear the opinions of self-employed people, businesses of all sizes, representative and industry bodies, charities and public sector organisations.
"Small businesses are at the heart of our economy and vital to our growth mission. The potential of digitising taxes, speeding up payments and streamlining administrative tasks will provide real benefits to the economy, supporting smaller firms and boosting growth. This is why we want to make sure e-invoicing works for SMEs, because cash flow can make all the difference between staying afloat or going under." Gareth Thomas, small business minister.
The consultation will gather views on standardising e-invoicing and how to increase its adoption across UK businesses and the public sector. It also explores how different e-invoicing models could align a business with their customers' businesses. People can take part whether or not they currently use e-invoicing.
Written by Rachel Miller.