- with readers working within the Technology and Law Firm industries
- within Transport, Media, Telecoms, IT, Entertainment and Family and Matrimonial topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
The government has published its response following the consultation it launched in July 2025 on measures to tackle late payment of invoices.
The government has been seeking to strengthen the payment practices regime, to address late payment and long payment terms, for a number of years. Measures already implemented include: the bi-annual payment practices reporting regime, which was introduced in 2017; the introduction of new annual report disclosures in relation to payment practices (with effect from financial years beginning on or after 1 January 2026); and the launch of a new Fair Payment Code.
In its response, the government has confirmed the further measures it will take, which include:
- introducing a mandatory 60-day maximum payment term, except in certain limited situations such as where both parties are large companies, or the goods or services are being imported/exported;
- imposing a mandatory statutory interest rate of 8% over the Bank of England base rate on all late payments and requiring businesses within the scope of the bi-annual reporting regime to include details on interest payments in their reports;
- requiring boards or audit committees of large UK businesses that have paid a significant proportion of their invoices late to publish a statement on GOV.UK explaining how they intend to improve their payment performance; and
- increasing the powers of the Small Business Commissioner to investigate, adjudicate and fine in relation to poor payment practices.
These changes will require both primary and secondary legislation, which the government has said it will take forward as soon as parliamentary time allows.
The July 2025 consultation had also asked for views on proposals relating to the use of retention clauses in construction contracts. Based on the feedback received, it is proposing to implement a ban on deductions from and withholding of retention payments in construction contracts. However, it will consult further before making a final decision.
For more details on the payment practices reporting regime, see our Corporate Governance Snapshot here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
