Late-Payment Bill 2026: What It Could Mean for UK Tradespeople
The Small Business Protections Bill proposes tougher late-payment rules. What UK tradespeople should know now, before the proposals become law.
- The Small Business Protections Bill entered Parliament in May; the measures are proposals until the Bill completes the parliamentary process and the relevant provisions commence.
- The government proposes a 60-day cap on payment terms for large firms, mandatory interest on late payments and stronger enforcement powers.
- Construction retentions are also in scope for action, but trades should not rewrite contracts as though a ban is already in force.
Late payment hurts trade firms twice: the invoice is outstanding while wages, fuel and materials still leave the account, and then more unpaid time disappears into chasing it. The government's 2026 Bill is aimed at that problem, especially where a small supplier is dealing with a much larger customer.
What is being proposed
The Department for Business and Trade says the Bill would introduce a 60-day maximum payment term for large businesses, make late-payment interest mandatory, strengthen the Small Business Commissioner's powers to investigate and adjudicate disputes, and allow fines for persistent poor payment. The announcement also promises action to ban construction retentions.
Read the government's 19 May 2026 Bill announcement. It describes the intended regime, not a substitute for the final Act, commencement dates or legal advice on a live dispute.
What has not changed yet
A Bill entering Parliament is not the same as every proposal being in force. Its wording can change, different provisions can start on different dates, and regulations may supply the detail. Until the final rules apply, use the law and contract terms that govern the invoice today. Do not tell a customer that a proposed 60-day cap or retention ban already overrides a signed agreement.
What trades can do now
- Put the payment date, deposit, stages and scope in writing before starting.
- Invoice immediately, with the purchase order and evidence the customer requires.
- Keep a clean timeline of approval, delivery, invoice and reminders.
- Know your current statutory rights to interest and recovery costs, and get advice before escalating a disputed commercial invoice.
- Price the cash-flow cost of long commercial terms instead of treating delayed money as free credit.
The proposed regime matters, particularly for subcontractors and small firms selling into large organisations. But the best protection today is still a clear paper trail and a disciplined payment process. Our late-payment guide covers the practical controls already available.
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