Many small businesses remain unclear about electronic invoicing requirements, with most unaware of HMRC communications ahead of the planned rollout.
At the Autumn Budget, Chancellor Rachel Reeves confirmed that, from April 2029, all VAT-registered businesses must issue invoices electronically. The move is intended to modernise the UK tax system. However, the announcement received limited attention, and concerns were raised about the lack of a phased introduction for smaller firms.
Research commissioned by HMRC and carried out by IFF Research surveyed 800 SMEs across different sectors, including manufacturing, transport, and business services. It found that 25% of respondents were not at all familiar with the term “e-invoicing”, while 69% said they had never used it. Notably, 91% reported not having seen any HMRC guidance on the change.
There is some nuance behind these figures. The Association of Taxation Technicians highlighted that several respondents initially claimed they did not use e-invoicing but later described processes that met the definition. These responses were subsequently reclassified.
Encouragingly, 59% of SMEs said they were at least somewhat familiar with e-invoicing, and 29% reported prior use. Among those, Sage was the most widely used platform at 46%, followed by Xero at 17% and QuickBooks at 9%.
A small minority, 5%, reported using no accounting software at all, with higher concentrations in manufacturing and construction.