Late Payments Consultation response published
The Government’s response to the Late Payments Consultation, which ran between 31 July and 23 October 2025, has now been published.
Late payments are estimated to cost the UK economy almost £11 billion per year. 14,000 businesses close each year as a result of late payments, equivalent to 38 businesses every day.
The responses to the consultation confirmed the urgent need to tackle late payments and the Government intends to take forward the following measures:
Small Business Commissioner (SBC) powers, including:
- Power to investigate
- Power to adjudicate
- Power to fine
Wider later payment measures
- Board-level scrutiny of payment practices: A requirement for the boards or audit committees of any persistently late-paying large company to publish commentary on why payment performance is poor and what actions they are taking to fix this.
- Maximum payment terms: Maximum payment terms of 60 days, with strictly limited exemptions, to ensure that smaller businesses are paid in a maximum of 60 days.
- Deadline for disputing invoices: The introduction of a statutory time limit for raising disputes. Businesses that do not raise disputes within the time limit will need to pay compensation to their supplier.
- Mandatory interest on late payments: A requirement that all commercial contracts will contain a right to statutory interest at 8% above the Bank of England base rate
Retention payments under construction contracts
- Prohibition of retention payments: Ban the practice of deducting and withholding of retention payments under the terms of a construction contract, consulting on its implementation.
The government intends to introduce these measures across the UK and will seek to introduce legislation to this effect. Late payments is a devolved matter for Scotland, Wales and transferred in Northern Ireland.
