The new UK payment rules

The Commercial Payments Bill

Introduced in the House of Lords in May 2026 — the most significant late-payment reform in over 25 years. Expected to come into force in 2027, after a transition period.

60-day cap on payment terms

A contract term demanding longer than 60 days becomes unenforceable. Exemptions are narrow, the main one being where both sides are large businesses.

Checking is deemed done at 30 days

Once the supplier has done the work, your acceptance or verification process is treated as finished 30 days later, whether or not it actually is. The payment clock runs from that point either way.

Queries raised at least 8 days ahead

A dispute has to reach the supplier at least eight days before payment falls due, with enough detail for them to understand it. Later or vaguer than that and they can recover the higher of £40 or 1% of the amount in dispute. This cannot be contracted out of.

Mandatory statutory interest

Overdue amounts carry interest at 8% above the Bank of England base rate, whatever the size of either business. A contract term that waives or varies it is void.

New Small Business Commissioner powers

Power to investigate persistent late payers, settle payment disputes without going to court, and fine up to 1% of annual UK turnover.

No more withheld retentions in construction

Deducting and withholding retention payments under a construction contract will be prohibited. The timing is still being consulted on.

Already in force

Portal reporting updates (April 2025)

Qualifying businesses now report the monetary value of late payments, and separately disclose the percentage of invoices unpaid because of disputes.

Directors' Report disclosures (financial years from January 2026)

Large companies — those meeting two of: over £54M turnover, over £27M balance sheet, over 250 employees — must report their payment practices in their audited annual reports.

The Fair Payment Code

A voluntary recognition scheme run by the Small Business Commissioner. Three tiers, awarded for two years at a time.

• Gold 95% of all invoices paid within 30 days.
• Silver 95% of all invoices paid within 60 days, including 95% of small-business invoices within 30 days.
• Bronze 95% of all invoices paid within 60 days.

How Paydance helps

• The clock starts when they sent it

  Every deadline in the Bill runs from the supplier's side, not yours. Paydance dates each invoice from the moment it arrived from the supplier, so the days you are counting are the days they have actually waited.

• Queries go out in time, with the reason attached

  A question is raised on the shared timeline where the supplier can see it and answer it. That leaves a dated record of what was asked and when, which is exactly what the eight-day rule turns on.

• Set a pace, and know your own number

  You choose how many days you aim to pay within, and your suppliers are told. Paydance measures what you actually do, so your payment record is a number you already know rather than one you have to go and work out.

• Every invoice gets a due date

  Most invoices state no due date at all. Where one is stated, that date rules; where it is not, Paydance assumes the law's own default of 30 days from the day the supplier sent it, says so honestly, and lets the supplier set the real date. Nothing you owe sits undated.

Paydance is not legal advice. It helps you keep payment work moving step by step — the rules above are summarised from public sources at the time of writing.