Federal News
UK Government Strengthens Contractor Payment Rules
March 24, 2026
The UK Government has introduced its strongest reforms in over 25 years to address late payments to contractors, particularly benefiting small businesses. Effective immediately, large firms are capped at a 60-day payment term, must pay mandatory interest on late payments, and the Small Business Commissioner is empowered with enhanced investigative and fining authority to enforce compliance. These measures aim to improve cash flow reliability for contractors and subcontractors across the UK construction and service sectors.
- Procurement professionals should anticipate stricter enforcement of payment timelines and prepare for potential contract adjustments to comply with the 60-day payment cap.
- Contractors and suppliers can expect improved protections and faster payments, reducing financial risk and improving operational stability.
- Organizations working with UK government contracts should review payment terms and ensure alignment with the new regulations to avoid penalties.
- The enhanced role of the Small Business Commissioner signals increased oversight and potential fines for non-compliance, emphasizing the importance of transparent payment practices.
The measures will strengthen the role of my office in taking on the worst payers alongside ensuring small businesses have a stronger voice on payment terms and late payment interest.
— Emma Jones, Small Business Commissioner
Agencies
Department for Business and Trade, Small Business Commissioner's Office
Locations
Sources
- Inside Housing - Home - Government announces crackdown on late payments to contractors · Inside Housing · Mar 24