25/03/2026
Late payments – tackling poor payment practices
The Department for Business and Trade has published the Government’s response to the consultation on tackling poor payment practices, which summarises consultation feedback and outlines next steps, a list of consultation respondents, and an updated impact assessment.
The consultation sought views on legislative measures which addressed late, long and disputed business-to-business payments, and the use of retention clauses in construction contracts. In total the late payments consultation received 867 responses from a wide range of stakeholders from across the UK, including all business sizes and a variety of sectors including retail, finance and manufacturing. Of the 867 respondents, there were 238 responses from businesses, trade associations, and individuals within the construction sector, representing large and small businesses within the contracting supply chain, as well as construction clients and professionals.
The responses to the consultation confirmed the urgent need to tackle late payments. The Government will introduce new legislation as soon as Parliamentary time allows and intends to take forward the following measures:
•Small Business Commissioner (SBC) powers
–power to investigate
–power to adjudicate
–power to fine
•Wider later payment measures
–board-level scrutiny of payment practices
–maximum payment terms
–deadline for disputing invoices
–mandatory interest on late payments
•Retention payments under construction contracts
–prohibition of retention payments
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. The Government will work closely with governments in Scotland, Wales and Northern Ireland under the Late Payment Common Framework to ensure regulatory alignment on late payments.
Further information is available at Gov.uk.