New late pay rules—will they hurt your business?

Introduction to Late Payments Legislation

In recent years, the issue of late payments has posed significant challenges for businesses across the UK. Recognizing the detrimental effects of these delays, the government has implemented new legislation aimed at improving payment practices.

⏳ Final Call: Speak Up on UK Late Payment Reforms

The UK government is proposing tough new rules to tackle late payments — and if your business could be affected, now’s the time to act. The GOV.UK consultation closed on 23 October 2025, but the impact is just beginning.

Late payments cost the UK economy £11 billion a year and force dozens of small businesses to shut down daily. These reforms aim to fix that — but they could also bring new challenges for larger firms and suppliers.

HMRC interest rates for late and early payments.

📌 What’s Changing?

Here’s a quick breakdown of the proposed legislation:

• 60-day payment limit: Large companies must pay suppliers within 60 days — no more “grossly unfair” terms.

• Future goal: 45 days: The government may reduce this further in the future.

• 30-day invoice verification: If you don’t dispute an invoice within 30 days, you’ll owe the full amount — plus interest.

• Automatic late payment interest: Statutory interest (currently 8% + base rate) will apply by default.

• Stronger enforcement: Persistent late payers could face fines and public scrutiny.

• Audit committee oversight: Large firms must review payment practices at board level.

• More power for the Small Business Commissioner: The SBC will be able to investigate and penalize poor payment behaviour.

✅ What You Can Do

• Review your contracts: Make sure your payment terms align with the proposed rules.

• Update your systems: Automate invoice tracking and dispute resolution.

• Pay on time: Build trust with suppliers and stay ahead of compliance.

Whether you’re a small business waiting on payments or a larger company managing supplier relationships, these changes matter. Staying informed — and prepared — is the best way to stay in control.

Want help reviewing your payment terms or drafting a supplier update? we have got your back.