Jurisdiction(s):
United Kingdom

UK late payment reforms: expanded Small Business Commissioner powers, 60‑day payment cap, mandatory statutory interest, adjudication and fines, board‑level scrutiny, dispute deadlines, and proposed construction retentions ban

Published on: 15 April 2026

Published by a LexisNexis Commercial expert

Legal News

Article summary

The government’s response

The consultation ran from 31 July to 23 October 2025 and received over 850 responses. Secretary of State Peter Kyle characterised the outcome as delivering ‘the most ambitious legislation to tackle late payments in over 25 years’ and ‘the strongest legal framework on late payments in the G7’. Addressing late payment formed a pledge in the 2024 Labour Manifesto.

At the heart of the package is a broadened remit for the SBC. The SBC—an independent public body created by the Enterprise Act 2016—currently helps small firms resolve payment disputes by offering guidance and issuing non-binding recommendations.

It will receive three new categories of powers. First, investigatory powers: the SBC will be able to open inquiries on a wider array of evidence, including anonymous tips; require companies to supply information; and conduct compliance checks on payment reporting data, backed by financial penalties. A ‘trigger point’ mechanism will also permit the SBC to begin investigations on its own initiative where a company’s reporting data shows a substantial share of late payments—for example, 25% or more. Second, adjudication powers: the SBC will adjudicate payment disputes between small and larger businesses out of court...

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