The UK’s Commercial Payments Bill is set for its final review in the House of Lords on 20 October 2026. Parliament confirmed the date on 16 October. The Bill aims to stop firms from leaving suppliers unpaid for too long. It may bring major changes to how UK businesses pay their bills. But it is not law yet.
What Is the Latest News on the Commercial Payments Bill?
The House of Lords finished its report stage on 15 September 2026. The Bill first went before Parliament on 19 May. It passed through a detailed review on 21 July, when members agreed to 30 government amendments.
As of Parliament’s 16 October update, no new changes had been put forward for the final Lords review. If the Bill passes this stage, it will go to the House of Commons. It will also need Royal Assent before it can become law.
Why Does the UK Want to Stop Late Payments?
Late payments can put small firms under huge strain. Government-backed research puts the yearly cost to the UK economy at almost £11 billion. It links late payments to 14,000 business closures a year, or about 38 each day.
The same research puts overdue bills at £26 billion at any one time. Affected firms that spend staff time chasing late payments lose an average of 86 hours a year on this task. That is time they could spend serving customers or growing their business.
What Payment Rules Could Change?
The Bill proposes a 60-day payment cap for most covered business deals. Public buyers would face a 30-day limit. Some deals may be exempt.
If a payment term breaks the new rules, a 30-day term would normally take its place in covered non-construction contracts. Firms could still agree on another term within the legal limit.
Late payment interest is already part of UK law. The Bill would make the right to charge it harder to remove from contracts. The rate is 8 percentage points above the Bank of England base rate.
Buyers could also face a fixed charge for raising an invoice dispute too late or with too little detail. For many bills, the cut-off would fall at the start of the last eight days before payment is due. Short payment terms have different rules.
What Does This Mean for Builders and Large Firms?
The Bill would ban retention clauses in covered construction contracts. These clauses let one firm hold back some money from another. The Bill allows a two-year transition period, counted from when the relevant rule takes effect.
It would also give the Small Business Commissioner more power to investigate poor payment practices and settle certain disputes.
Under the proposed rules, a single fine for certain payment reporting breaches could reach 1% of a company’s annual turnover.
What Should UK Businesses Do Now?
Small firms, suppliers, public buyers and large firms should review their payment terms now. Keep clear invoice records and track unpaid bills. Make sure staff raise disputes in good time. Builders should also review contracts that allow money to be held back.
Ignoring these changes could leave firms unprepared for new duties, extra costs and possible fines once the law takes effect.
The final rules and start dates still need to be confirmed.
Why Trust LANOP to Help Your Business Prepare?
At LANOP Business & Tax Advisors, we help UK businesses keep clear accounts, track unpaid invoices and plan their cash flow.
Our bookkeeping, financial reporting and accounting support can help owners see where their money stands and what needs attention.
As the Commercial Payments Bill moves forward, having accurate financial records can make it easier to prepare.
Contact LANOP to review your payment records and plan your next steps with greater confidence.
