E-invoicing if you're not VAT registered: what changes in 2029

If your business is not VAT registered, the 2029 mandate does not oblige you to send e-invoices. The government's requirement is that all VAT invoices must be e-invoices from April 2029. Only VAT-registered businesses can issue VAT invoices, and the government has said that "many of the smallest businesses who are not required and choose not to be registered for VAT will not be obliged to adopt this technology."

That is the confirmed position. But being outside the mandate does not mean e-invoicing will pass you by. Here is how it may still reach you.

Why the mandate stops at VAT registration

HMRC's VAT guide sets out the basics:

• You cannot charge VAT, or issue a VAT invoice, unless you are VAT registered.
• VAT-registered suppliers must issue VAT invoices to VAT-registered customers.
• They "do not need to issue VAT invoices for supplies to customers who are not VAT registered."

Because the mandate is built on the VAT invoice, a business outside VAT has nothing to convert. The consultation response describes the policy as covering "VAT invoices", issued mainly in B2B and B2G transactions. No separate obligation for unregistered businesses has been proposed.

Do not show VAT on your invoices to look more established. Issuing an invoice showing VAT when you are not registered can lead to a penalty under Schedule 41 of the Finance Act 2008, calculated as a percentage of the VAT shown (up to 100% for deliberate and concealed behaviour).

Who is typically not VAT registered

• Sole traders, partnerships and companies with taxable turnover at or below the £90,000 threshold that have not registered voluntarily
• Businesses that make only exempt or "out of scope" supplies, which cannot register
• Many small charities, clubs and community groups

If you fall into one of these groups, the mandate does not require anything of you.

How e-invoicing could still affect you

Situation	What to expect	Status
You buy from VAT-registered suppliers	They are not required to give you VAT invoices. They may send you an e-invoice, a PDF or a receipt.	Supplier treatment of unregistered customers is not confirmed
You sell to large companies or public bodies	Some already ask suppliers to submit invoices through a portal or Peppol. That is a commercial or procurement requirement, not HMRC's.	Current practice
You plan to grow past £90,000	Once registered, your VAT invoices will need to be e-invoices if registration takes effect after April 2029.	Confirmed principle
You want to e-invoice voluntarily	You can. Peppol works with non-VAT identifiers.	Optional

The supplier's dilemma

HMRC's guidance acknowledges that suppliers usually cannot tell whether a customer is VAT registered, and many issue a VAT invoice to anyone who asks. Under the mandate, a supplier may simply send e-invoices to every business customer it can reach on Peppol. Whether suppliers will need to check registration status, or can send unregistered customers something else, is one of the details the implementation roadmap is expected to settle.

If a supplier sends you an e-invoice and you have no software to read it, the best fix is a commercial one: ask for a PDF copy or a readable version. Most e-invoicing tools can produce a human-readable view.

Joining Peppol without a VAT number

UK e-invoicing will run on Peppol. Every participant needs a Peppol ID made of a scheme code and an identifier. The UK VAT number scheme is code 9932, but the official Electronic Address Scheme list includes others, such as 0088 for the Global Location Number (GLN). A business without a VAT number can therefore be reachable on Peppol through a provider, if it wants to be.

Which identifier schemes the UK will recommend for businesses without a VAT number has not been confirmed. Our Peppol participant ID guide explains the options.

Is it worth doing anyway?

There can be good commercial reasons:

• Getting paid faster. The consultation response cites industry research linking e-invoicing to fewer late payments, although that research came from respondents, not HMRC.
• Customer requirements. If your largest customers move their accounts payable to Peppol, being reachable may make you easier to buy from.
• Future-proofing. If you expect to register for VAT, setting up now avoids a rush later.

If your invoice volumes are low and your customers are happy, there is no obligation to change.

What is not confirmed yet

• Whether VAT-registered suppliers must send e-invoices to customers who are not VAT registered
• Which Peppol identifiers non-VAT-registered businesses should use
• Whether public bodies, which receive invoices under the mandate, will set their own rules for unregistered suppliers

Expect more detail in the roadmap due at Budget 2026 on 28 October 2026.

What to do now

1. Confirm your VAT position and how close you are to the £90,000 threshold.
2. Check whether any customer already asks for e-invoices or portal submission.
3. If you expect to register before or after 2029, choose accounting software with Peppol support on its roadmap.
4. Never show VAT on an invoice unless you are registered.

See also who is in scope, e-invoicing for sole traders and the am I in scope tool.