E-invoicing and Making Tax Digital: what's the difference?

They're both part of HMRC's move to digital tax, and they're easy to mix up. In short: Making Tax Digital is about what you send to HMRC. E-invoicing is about how your invoices reach your customers.

	Making Tax Digital (MTD)	E-invoicing
What it's about	Keeping digital records and sending HMRC summaries using compatible software	Sending VAT invoices to your customers as data files over Peppol
Who receives it	HMRC	Your customer (not HMRC, at least at the start)
Who it covers	MTD for VAT: VAT-registered businesses. MTD for Income Tax: sole traders and landlords over the income thresholds	VAT-registered businesses invoicing other businesses and the public sector
When	MTD for VAT: already in place. MTD for Income Tax: started April 2026 for qualifying income over £50,000; over £30,000 from April 2027 and over £20,000 from April 2028	Planned from April 2029

How they fit together

Both need the same thing from you: invoices that live in software, not on paper. If you already use software for Making Tax Digital, you're part of the way to e-invoicing. Your invoices are already digital records. They just need to be sent as e-invoices to the customers who are covered.

A sole trader who isn't VAT registered may need Making Tax Digital for Income Tax (if their income is over the threshold) but is not expected to need e-invoicing. A VAT-registered business that invoices other businesses is likely to need both.

Will HMRC see my e-invoices?

Not at the start. The government has said it won't introduce real-time reporting of invoices to HMRC alongside the 2029 mandate. It may look at it later, once e-invoicing is well established. Your Making Tax Digital submissions carry on as normal.

One piece of software, or two?

Many businesses will use the same software for both, or invoicing software that links to their accounts software. When you choose, ask whether it handles Making Tax Digital (directly or through your accounts software) and has a plan for e-invoicing over Peppol.

PaySorted and both

PaySorted keeps your invoices and payments as digital records, syncs them to Xero, QuickBooks, FreeAgent and Sage (which send your Making Tax Digital updates), and already makes e-invoice files in the Peppol format. See how PaySorted gets you ready →

Try PaySorted free for 30 days

Sources

All facts on this page were last checked against these official sources on 19 October 2026.

Want to send e-invoice-ready invoices now, without the hassle?

PaySorted already makes your invoices in the Peppol e-invoice format, checks every detail an e-invoice needs, and keeps up with the rules as they're confirmed. So you don't have to.

E-invoice files in the Peppol format, made for you today
Knows which customers need one: homeowners get a normal invoice, businesses and public bodies get an e-invoice too
Flags anything missing before you send, like a VAT number or buyer reference
Updated automatically as HMRC publishes the UK rules, with Peppol sending switched on before 2029 at no extra cost
Chases late payers for you by email and text, so you get paid faster now