Regulatory updates - United Kingdom

The announcement forms part of the broader 'Tax Update 2026: Simplification, Modernization and Fairness' policy paper published by the UK authorities on June 23, 2026. The policy paper sets out a package of tax and customs measures designed to reduce administrative burdens, improve certainty, fairness, and customer experience.

Within this update, the government announced that Peppol will underpin the UK's e-invoicing framework, providing software developers and businesses with a clear direction ahead of the 2029 mandate and enabling them to begin planning their product development and e-invoicing rollout accordingly. The government has also committed to ongoing engagement with stakeholders on the future role of legacy systems that are unable to interoperate within the new framework.

On November 26, 2025, as part of the UK Budget 2025, the Chancellor confirmed the removal of the £135 customs duty exemption for low-value imports. The change will apply to all commercial consignments currently benefiting from this relief and is expected to be fully implemented by March 2029.

The Government has launched a consultation on the new compliance framework, which includes:

• Item-level data requirements for customs declarations.
• Shifting compliance responsibility to marketplaces and sellers, with potential UK fiscal representative obligations for non-established businesses.
• Integration of customs duty collection with VAT processes to streamline reporting.
• Replacement of the current BIRDS model with a new LVI customs system designed for high-volume, low-value flows.

This reform aligns the UK with international trends, including the EU’s plan to abolish the €150 de minimis threshold and the US tightening of its $800 exemption. The move is intended to protect revenue, reduce undervaluation risks, and create a level playing field for domestic retailers.

The consultation is currently open and will close on March 6, 2026.

On November 26, 2025, the UK government published Budget 2025, confirming a major step toward digitalising tax administration.

As part of a broader investment in HMRC, the government will require all VAT invoices to be issued electronically from April 1, 2029. A detailed implementation roadmap will be developed in consultation with stakeholders and published at Budget 2026.

E-invoicing is expected to reduce administrative burdens, improve reporting accuracy, accelerate payments, and help close the VAT gap. The UK’s move aligns with the EU’s VAT in the Digital Age (ViDA) initiative, which will require e-invoicing for cross-border transactions from July 2030.