As at August 2026 none of the late payment reforms are law. The Commercial Payments Bill is at Report stage in the House of Lords, with no Commons stages and no Royal Assent, and the government's own response says maximum payment terms start "with 60 days, no earlier than 2027". The 45-day figure you'll see in a lot of commentary has been explicitly set aside for now. So this piece sorts what you're hearing into four categories: in force, in the Bill, announced, and dropped.
The short version
- Nothing has changed yet, and the law you're working under is still the Late Payment of Commercial Debts (Interest) Act 1998 as it stands.
- The Commercial Payments Bill [HL] was introduced on 19 May 2026 and is at Lords Report stage.
- A 60-day cap on payment terms is in the Bill, and the response says it starts no earlier than 2027.
- A 45-day cap was consulted on and is not being taken forward now.
- The Bill would remove the ability to contract out of statutory interest, and that's a real change to how your terms get drafted.
Where things stand as at August 2026
The government consulted on late payment in "Late payments: tackling poor payment practices", and published its response, "Time to pay up", as a consultation outcome. On legislation the response says the government intends "to legislate as soon as Parliamentary time allows".
The vehicle is the Commercial Payments Bill [HL]. It was introduced in the Lords on 19 May 2026, had its second reading on 9 June 2026, and as at early August 2026 sits at Report stage in the Lords, with the most recent print being HL Bill 45 as amended in Committee on 21 July 2026. It hasn't been through the Commons and it hasn't received Royal Assent, so none of it binds you or your customers yet.
The Bill doesn't fix a commencement date either. The commencement clause provides that the Act comes into force on a day the Secretary of State appoints by regulations, so the date gets set later by statutory instrument and you won't know it until that instrument appears.
| Measure | Status as at August 2026 |
|---|---|
| Statutory interest at 8% over base rate | In force, unchanged since 1998 |
| Payment practices reporting for large companies | In force, under the 2017 Regulations |
| 60-day maximum payment terms | In the Bill before Parliament, no earlier than 2027 |
| Removing the ability to contract out of interest | In the Bill before Parliament |
| Wider Small Business Commissioner powers | In the Bill before Parliament |
| Reporting interest paid on late payments | Announced, needs secondary legislation |
| Audit committee commentary on poor payment | Announced, vehicle not confirmed |
| 45-day maximum payment terms | Consulted on, not being taken forward now |
Maximum payment terms
There's currently no statutory cap on how long your customer can take to pay you. What you have instead is the machinery in section 4 of the 1998 Act. It pulls an agreed payment date back to 60 days where the customer is not a public authority, unless the longer date is not grossly unfair to the supplier, and back to 30 days where the customer is a public authority.
The Bill would replace that with a cap on what you and your customer are allowed to agree. The explanatory material shows a new section setting 30 days for public authority payers and 60 days for others, and the government response is specific about intent and sequencing: "we intend to impose maximum payment terms of 60 days, with strictly limited exemptions", "starting with 60 days, no earlier than 2027".
The difference between the current position and the proposed one is where the burden falls. Today a 90-day term your customer puts in front of you can stand if it isn't grossly unfair, and that's a question of the circumstances. Under a cap it wouldn't stand at all, subject to whatever exemptions get drawn.
The end of contracting out
Of everything in the Bill, this is the change most likely to affect how your contracts are written, and it gets the least coverage.
Today, section 8 of the 1998 Act allows a contract to displace statutory interest where it provides a "substantial contractual remedy" for late payment instead, with section 9 setting a test that leans towards upholding the agreed term. And that's why you'll see contracts specifying a low interest rate: agreeing a rate closes off the statutory one.
The response states the intention plainly: "we intend to make it a requirement that all commercial contracts will contain a right to statutory interest at 8% above the Bank of England base rate, and to remove the ability for parties to agree an alternative remedy to statutory interest." The Bill carries a clause making a contract term void so far as it purports to exclude or vary the right to statutory interest.
If that passes, the interest position stops being negotiable, and what you're entitled to no longer depends on what your customer's standard terms happen to say.
The Small Business Commissioner
If you're a small business, the Commissioner today has a statutory duty to review your enquiries, to investigate your formal complaints about late payment, and to give you advice and support. The powers stop short of fining, of adjudicating binding disputes, and of opening an investigation without a complaint.
The response sets out three additions: investigating businesses "suspected of poor payment practices or inaccurately reporting payment performance", adjudicating to "settle payment disputes outside of the court process", and fining, "including significant potential fines for large companies that persistently pay late". The Bill contains clauses for an adjudication scheme, for investigating larger businesses that persistently engage in poor practice, and for a financial penalty on a criminal standard of proof.
The adjudication power is the one worth watching if you invoice large customers, because a route to settle a dispute outside court would change your calculation on debts that are too small to litigate.
Reporting duties
The Reporting on Payment Practices and Performance Regulations 2017 are in force and require large companies to report payment terms, maximum payment periods, dispute mechanisms and actual payment performance. So if you invoice large companies, their published figures are already there for you to read.
Two additions have been announced. The first is a requirement to report interest paid on late payments under the same 2017 Regulations, and that would need secondary legislation. The second is a duty on boards or audit committees of large businesses that have paid a significant proportion of invoices late to publish commentary on GOV.UK explaining why performance is poor, what they intend to do, and which previously stated actions were not implemented and why. The response also says the Commissioner will write to boards and audit committees seeking assurance on payment performance reporting.
Which instrument carries the audit committee duty is not clear from the material published so far, so you can take the intent as stated but treat the mechanism as unsettled.
What was dropped
The 45-day cap is the one to be careful about, because you'll find it in a lot of secondary commentary, presented as though it were scheduled. The response is explicit:
"As part of the consultation, we proposed that the maximum payment terms may be reduced to 45 days over time. We do not intend to take this forward now but may revisit it in the future."
So what you're looking at is 60 days as the intended cap, with 45 days shelved and not legislated. Anything you read that presents a 45-day requirement as coming is describing a proposal that was set aside.
What to do before any of it lands
Nothing here requires action from you yet, and there's a reasonable case for not waiting either.
Start with what your own terms say about interest. If your contracts specify a low interest rate in order to look reasonable, you've already given up the statutory rate, and that's worth revisiting now instead of when a Bill forces it.
Then look at your longest terms. If a significant share of your revenue is on terms beyond 60 days, a cap would change those contracts, so find out which ones they are and what they're worth to you either way.
What's harder to justify is building a process on a Bill. Commencement is by regulations not yet made, and the response says the first measure lands no earlier than 2027.
The wider point is that reform changes what your customer is allowed to agree, not whether they pay you on the day. How the money gets collected still matters more than the deadline: invoices set to collect automatically are paid 98.0% of the time with 0.9% going overdue, against 90.8% paid and 5.3% overdue when collected on demand (Adfin platform data, requests created in the seven months to the end of January 2026). Where a term is being ignored anyway, capping it at 60 days changes less for you than moving that customer onto a mandate.
Common questions
Have the UK late payment rules changed? Not yet. As at August 2026 the Commercial Payments Bill is at Report stage in the House of Lords with no Royal Assent, so the 1998 Act still applies to your invoices as it stands.
Is there a 60-day limit on payment terms in the UK? Not as a hard cap today. Section 4 of the 1998 Act pulls an agreed date back to 60 days for non-public-authority customers unless the longer date is not grossly unfair. A statutory cap is in the Bill, intended to start no earlier than 2027.
Is the payment terms limit dropping to 45 days? Not currently. The government response says it proposed a reduction to 45 days over time but does not intend to take it forward now, though it may revisit it.
Will I still be able to agree a different interest rate with a customer? Today, yes, where your contract provides a substantial remedy instead. The Bill would remove that ability and make a term void so far as it excludes or varies the right to statutory interest.
When do the new Small Business Commissioner powers start? They're in the Bill rather than in force. Commencement will be set by regulations after Royal Assent, so no date is fixed for you to plan around.
What should I do now? Check whether your own terms give away the statutory interest rate, and identify contracts on terms beyond 60 days. Both are useful now and neither depends on the Bill passing.
Sources
- Parliament — Commercial Payments Bill [HL] (accurate as of August 2026)
This article describes the status of proposed UK late payment reform as at August 2026 and is not legal advice. A Bill before Parliament can change, and commencement dates are set by regulations, so check the current position before relying on it. Last updated August 2026.
