- New powers will give the Small Business Commissioner the ability to issue financial penalties to persistent late payers
- The Commissioner will be able to settle late payment disputes out of court
- Part of a wider package of measures to be introduced by the Government giving the UK the strongest laws on late payments in the G7
Today, the UK Government has confirmed the progress of a number of measures designed to tackle late payments. These include a significant expansion of powers for the Small Business Commissioner.
The new powers will allow the Commissioner to levy financial penalties against large businesses who are persistent late payers. The penalties could amount to a percentage of a business’s turnover which could equate to many millions for some of the UK current poor payers.
Other powers include the ability to settle late payment disputes out of court through a new Adjudication function. This expands the Commissioner’s existing ability to review enquiries and investigate formal complaints made by small businesses regarding late and overdue payments.
The new powers were announced as the UK Government published their response to the late payment consultation launched in Autum 2025. The consultation reviewed the proposed measures, and strong support from across the business community was received for an expansion of the Commissioner’s powers.
Other actions the Government is announcing today to clamp down on late payments include a new 60‑day cap on payment terms to be imposed on all large firms when paying smaller suppliers. Plus, mandatory interest on late payments, with a requirement for all commercial contracts to include statutory interest set at 8% above the Bank of England base rate.
Research from the Department of Business and Trade and the Small Business Commissioner has shown that late payments cost the UK economy almost £11 billion per year. The issue causes 38 businesses to close each day with business owners spending an average of 86 hours chasing debt.
Emma Jones, Small Business Commissioner, said:
“I am on a mission to make life easier for small firms by getting money moving faster through the economy by tackling late payments. The measures the Government has announced today 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.
I work with many firms, including those on the Fair Payment Code, who see the value of prompt payment to their business, but for too many late payments and long payment times persist with little accountability.
These reforms will reduce the hours spent chasing debt, allowing small businesses to focus on more productive and enjoyable growth.”
Abdul Goffar, Director, ACCA UK, said:
“We urged the government to be practical – bringing forward pragmatic, transparent solutions which businesses can understand and work with. And we’re glad they’ve listened.
We co-operate closely with the SBC, and we look forward to continuing to do so in this new era which we hope will reset the payment culture and so increase the chances of much needed business growth.”
Alan Vallance, ICAEW Chief Executive, said:
“Late payments are damaging to the economy. Paying suppliers late threatens jobs and the survival of otherwise productive businesses. Time spent chasing payments is time that is not being used by businesses to win new work and grow.
We’re therefore pleased to see the government take action to improve payment culture. The new powers for the Small Business Commissioner will enable targeted and proportionate action to be taken against the small minority of persistent late payers, as well as promoting cultural change on late payments.”
Secretary of State for Business and Trade, Rt Hon Peter Kyle MP said:
“Far too many businesses are forced to shut down because they have not been paid – that is simply unacceptable.
We are unveiling the strongest, most robust changes to payment laws in over a generation – laws that will transform the fortunes of small businesses for years to come and make their day-to-day lives much easier.”
Minister for Small Business and Economic Transformation, Blair McDougall MP said:
“I know first-hand how difficult late payments can be, forcing you to decide if you can afford to keep a business running, pay employees or even buy Christmas presents for your children.
That is why I’m proud to be leading the charge on tackling a problem that has been left untouched for far too long.
These are genuinely game-changing measures that will ensure no business, no employer, no family has to endure the immense strain of being left strapped for cash they have already earned.”