Victoria FergusonThe King’s Speech took place on 13 May, setting out the government’s legislative priorities for the year ahead.
One of those priorities is tackling late payments. We already knew this was a priority for the government. A consultation was carried out in 2025 containing proposals aimed at tackling poor payment practices and the government response was published in March 2026. The government response suggested a number of changes including:
- Maximum payment terms of 60 days with limited exceptions
- Mandatory statutory interest at 8% above the Bank of England base rate
- Deadlines for disputing invoices
- Additional reporting on statutory interest
- Audit committees and board-level scrutiny of large company payment practices
- Financial penalties for persistent late payers, with new powers to the Small Business Commissioner
- A shake up for retention clauses in construction contracts
We knew that primary and secondary legislation was needed to bring these measures into effect. The Department for Business & Trade had said it would legislate “when Parliamentary time allows” and there had been suggestions a Bill would be included in the King’s Speech in May.
We now have confirmation this has happened. The Small Business Protections (Late Payments) Bill has been announced to tackle late payments. The structure and content of the proposed bill follows the government response to the 2025 consultation.
You can read the background briefing notes to the King’s Speech for more details of the proposed late payment reforms. Businesses need to monitor the reforms and consider the impact on their payment processes.