UK late payment reform 2026: what the 60-day cap means for you

The UK government plans a hard 60-day limit on payment terms between businesses, firmer statutory interest on late payments and public reporting for large companies that pay late. Until the new law is in force, the current rules already let you charge 8 percent over Bank of England base rate plus a fixed recovery fee on late B2B invoices.

Late payment is the small business problem the UK has tried to fix for 25 years. The latest plan is the firmest yet, and it matters most to the businesses with the least power in the deal: studios, consultants and sole traders billing larger companies.

What the government announced

In March 2026 the government published its response to the late payment consultation. According to a summary by the law firm Mayer Brown, the package includes three main measures (Mayer Brown, UK government response to late payment consultation):

1. A hard cap of 60 days on payment terms between businesses, with limited exemptions.
2. Statutory interest of 8 percent above base rate on late commercial payments, made firmer so it is harder to contract out of.
3. Reporting duties for large companies that pay a large share of their invoices late, so poor payment shows up in public.

These are plans. They need legislation before they change your rights, and the details can shift on the way. Treat the dates and exemptions as unconfirmed until the law is passed, and check the final text before you rely on it in a dispute.

What already applies today

You don't have to wait for the reform. The current law already gives a small business real tools.

The Late Payment of Commercial Debts (Interest) Act 1998 lets you claim interest on late payments between businesses (legislation.gov.uk, Late Payment of Commercial Debts (Interest) Act 1998). The government's guidance sets the statutory rate at "8% plus the Bank of England base rate for business to business transactions" (GOV.UK, late commercial payments). The base rate itself is published by the Bank of England (Bank of England, Bank Rate).

You can also add a fixed sum for the cost of chasing the debt. GOV.UK lists it by invoice size:

• under £1,000: £40
• £1,000 to £9,999.99: £70
• £10,000 or more: £100

On payment terms, the guidance today says the payment period can be up to 60 days for business transactions, but it must be fair to both businesses. If no terms are agreed, payment is due 30 days after the customer gets the invoice or the goods or service. The reform's main change is to turn that 60 days into a firm ceiling for most deals.

What changes for a small UK business

The legal change matters less than the shift in bargaining power. Three things move.

Long terms get harder to impose. Large companies often table 90 or 120 day terms to small suppliers. Once the cap is law, a supplier can point to the statute instead of arguing about "industry norms".

Interest becomes routine. Today many small businesses never claim statutory interest because it feels aggressive. A firmer, standard right makes it normal to put on every invoice.

Slow payers become visible. Reporting duties for large companies mean habitual late payment shows up in public. That gives a small supplier quiet weight in a follow-up message, without any threat.

There is also a body you can go to now. The Office of the Small Business Commissioner handles payment complaints from small businesses against larger ones (Office of the Small Business Commissioner).

What to put on your invoices now

The cheapest way to use the law is to write it down before anything is late.

Payment terms and a due date

State the due date on every invoice, not only "net 30". A date leaves nothing to interpret. Thirty days is a fair default; keep 60 for clients who need it, and never longer.

A statutory interest line

Add a short line saying overdue amounts attract interest at 8 percent above the Bank of England base rate under the Late Payment of Commercial Debts (Interest) Act 1998, plus the fixed recovery sum. It is the legal baseline, not a threat, and it makes slow payment cost something.

Deposits and milestones

The safest unpaid invoice is the one that never grew large. For bigger projects, take a deposit before you start and bill at clear milestones. No payment cap helps if a client goes under on day 59. Our guide to collecting a deposit before a project starts covers how to ask for one.

A reminder you can send

When an invoice passes its due date, a short, dated message works better than a long one. Something like this:

"Hi [name], invoice [number] for [amount] was due on [date] and is still open. Could you let me know when it will be paid? As set out in our terms, overdue invoices attract statutory interest at 8 percent above base rate and a fixed recovery fee. I'd much rather it simply be settled, so a payment date is all I need."

It names the invoice, the amount and the date, mentions the law once without making a threat, and asks for one thing: a date. If the date passes too, send a second reminder a week later, then a formal letter before you consider a claim.

What the reform will not do

It is worth being clear about the limits.

It will not make a small debt worth a court case. Court is still slow and costly for small sums, though you can claim money online through the courts if you have to (GOV.UK, make a court claim for money). For most invoices the real path is still a polite reminder, a firm reminder, a formal letter, then a claim.

It will not protect you from a client who runs out of money. Deposits and milestones still do that job.

It only covers UK business contracts. If your clients are in the EU, the US or the Gulf, their local rules and your contract decide what happens. For the broader playbook on chasing money, see how to handle late-paying clients.

How Delivvo keeps UK invoices on time

Delivvo puts the deposit, the due date and the reminders in place before the work starts, so the law is a backstop instead of your main tool.

Here is the flow:

1. The client accepts your quote, signs the contract and pays the deposit through one link. The payment terms you write into the contract are signed, with a signing record and an archived PDF.
2. Your invoices carry sequential numbers in your own format, your business details and a clear due date. Put your late payment wording, including the statutory interest line, into the payment clause of the contract, where you can edit every word.
3. For larger jobs, a payment schedule splits the fee into up to 12 payments, so no single unpaid invoice can grow too big.
4. Automatic reminders go out at 7, 14 and 30 days after the due date and stop the moment the client pays. You don't have to write the awkward email yourself.
5. If a client disputes a document, every invoice and contract carries a verification code anyone can check, showing who issued it, its number, dates and status.

The client pays you directly through your own gateway, such as Stripe or PayPal, and Delivvo takes 0%. Nothing sits with a platform while you wait, and the money lands in your own account. Your client sees everything in one portal with no password to remember: the signed contract, each invoice, what is paid and what is due. A client who can see the balance in one place has fewer reasons to say they never got the invoice.

Next, look at how payments work or how the CRM fits around it.

FAQ