None of the proposed late payment reforms is law yet. The Commercial Payments Bill would cap payment terms at 60 days for large businesses paying smaller suppliers, stop contracts replacing statutory interest with a lower rate, and give the Small Business Commissioner powers to settle disputes and fine persistent late payers. In October 2026 it's still in the House of Lords, and the government says the 60-day cap will start no earlier than 2027.
In this article
The short version
- None of the proposed late payment reforms is law yet.
- The Commercial Payments Bill would cap terms at 60 days for large businesses paying smaller suppliers, no earlier than 2027.
- It would also stop contracts replacing statutory interest and give the Small Business Commissioner new powers.
- The 45-day cap has been dropped for now.
- Large companies already report payment data, including in directors' reports from 2026.
What's already in force
The law you're working under today is the Late Payment of Commercial Debts (Interest) Act 1998, as amended. On a late business invoice you can claim interest at 8% above the Bank of England base rate, which is 11.75% a year with the base rate at 3.75%, plus fixed compensation of £40, £70 or £100 per invoice. There's no hard cap on payment terms. A business customer can agree terms longer than 60 days with you, as long as they're expressly agreed and not grossly unfair to you, and public bodies are held to 30 days. A contract can also replace statutory interest with its own remedy, which is why some customers' terms name a low interest rate.
Two reporting duties apply to large companies already. Under the 2017 payment practices regulations, they publish their payment terms and how quickly they pay every six months. And since 1 January 2026, for financial years starting on or after that date, large companies must also include payment data in their directors' report: their standard terms, average days to pay, and how much they paid late. Neither duty applies to small or medium-sized businesses, but both let you see how a large customer pays its suppliers before you agree terms with it.
What's in the Commercial Payments Bill
The bill was introduced in the House of Lords on 19 May 2026 and completed its Lords report stage on 15 September 2026. Its Lords third reading is listed for 20 October 2026. After that it still needs to go through the House of Commons and receive Royal Assent, and most measures then need a start date set by regulations. The text can change at any of those stages.
| Measure | Status in October 2026 |
|---|---|
| 60-day maximum payment terms for large businesses paying smaller suppliers, with limited exemptions | In the bill, not law; government says no earlier than 2027 |
| A fixed 30-day maximum for public bodies, replacing today's rule | In the bill, not law |
| Statutory interest made compulsory, with no contracting out | In the bill, not law |
| A fixed sum for suppliers when a customer raises a dispute late or without enough detail | In the bill, not law |
| Small Business Commissioner powers to investigate, adjudicate disputes and fine | In the bill, not law |
| Construction retentions ban | In the bill, timing still to be consulted on |
| Large companies reporting late payment interest paid and owed | Announced, needs separate regulations |
| Board or audit committee commentary on poor payment performance | Announced for large companies with poor records; mechanism not settled |
Of these, the end of contracting out probably affects your paperwork most. If it passes, a term in your customer's contract that sets a lower rate, or excludes interest altogether, would no longer take away your right to 8% above base rate.
The adjudication power matters if you supply large customers. A way to settle a payment dispute outside court would give you another option on debts too small to be worth a court claim.
What has been dropped or left open
You'll still find a 45-day maximum in a lot of commentary, sometimes presented as if it's coming. It was announced in 2025 as a later step, but the government's March 2026 consultation response says it isn't being taken forward now, though it may be revisited. An amendment to bring it back within five years was tabled in the Lords, so check the final text if it matters to you.
Other details you'd need for planning are still open. The bill leaves the definition of a large business to regulations, and the government has promised a lead-in time before the new powers start, so you'd get some notice, but it hasn't given dates. The government says the measures won't apply retrospectively, so your existing contracts and payments are judged under the rules in force at the time.
What to do while the bill goes through
Nothing here requires you to act yet, but some checks are useful whatever happens.
Read your own terms first. If your contracts name a low interest rate to look reasonable, you may already have given up the statutory rate, and you can change that now.
Then find your longest terms. If a large share of your income comes from large customers on terms beyond 60 days, a cap would change those contracts, so it helps to know which they are.
Even if the cap passes, it limits the terms your customer can agree to, but it won't make them pay on the due date. Adfin can add statutory interest to overdue business invoices automatically, with grace periods and a waiver for customers you'd rather not charge, and its collection agents chase late payers over email, SMS and WhatsApp within rules you set, whatever the law ends up saying about terms.
Common questions
Have the UK late payment rules changed? Not yet. The Commercial Payments Bill is still going through Parliament, so the Late Payment of Commercial Debts (Interest) Act 1998 applies as it stands.
Is there a 60-day limit on payment terms in the UK? Not a hard cap. Terms over 60 days must be expressly agreed and not grossly unfair to the supplier, and the bill's 60-day cap would start no earlier than 2027.
Is the payment terms limit dropping to 45 days? Not under current plans. The government says it isn't taking the 45-day step forward now but may revisit it.
Will I still be able to agree a different interest rate with a customer? Today, yes, if the contract gives a substantial remedy instead. The bill would stop contracts excluding or reducing statutory interest.
When will the Small Business Commissioner's new powers start? No date is set. The powers need the bill to become law and then regulations to bring them into force.
Do small businesses have to report their payment practices? No. The reporting duties apply to large companies only, including the directors' report payment data required for financial years starting on or after 1 January 2026.
Sources
- UK Parliament - Commercial Payments Bill [HL]: stages (accurate as of October 2026) https://bills.parliament.uk/bills/4128/stages
- GOV.UK - Commercial Payments Bill: overview (accurate as of October 2026) https://www.gov.uk/government/publications/commercial-payments-bill-factsheets/commercial-payments-bill-overview
- House of Lords Library - Commercial Payments Bill [HL]: progress in the Lords (accurate as of October 2026) https://lordslibrary.parliament.uk/research-briefings/lln-2026-0049/
- legislation.gov.uk - The Companies (Directors' Report) (Payment Reporting) Regulations 2025 (accurate as of October 2026) https://www.legislation.gov.uk/uksi/2025/1152/made
- GOV.UK - Late commercial payments: charging interest on commercial debt (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
- Adfin - Credit control (accurate as of October 2026) https://www.adfin.com/credit-control
