UK introduces new law to tackle late payments for small businesses
UK introduces new law to tackle late payments for small businesses
Updated at: June 7, 2026 at 02:15 AM
In May 2026, the UK government introduced the Small Business Protections Bill, representing the most significant crackdown on late payment practices in over 25 years.
Late payments cost the UK economy roughly £11 billion each year and contribute to the closure of 38 businesses daily.
This legislation aims to support small and medium-sized enterprises (SMEs) by creating a fairer, more disciplined business environment.
Key reforms include capping payment terms at 60 days for large firms and making 8% statutory interest on late payments mandatory.
Furthermore, the Small Business Commissioner will receive enhanced powers to investigate poor practices and impose significant fines on persistent offenders.
Large companies may also be required to publicly disclose their payment performance, ensuring accountability at the board level.
Currently moving through the House of Lords, the legislation intends to be a non-waivable provision, preventing large corporations from using private contracts to bypass these new protections for smaller suppliers.
