The 60-day payment cap and mandatory interest are in a Bill that is still going through Parliament. Here is what it would change, where it has got to, and what you can use on a late invoice today. Checked 24 September 2026.
None of the late payment reforms is law yet. The Commercial Payments Bill, introduced in the House of Lords on 19 May 2026, would cap payment terms at 60 days, make late payment interest mandatory and let the Small Business Commissioner fine persistent late payers. Until it is passed and brought into force, the Late Payment of Commercial Debts (Interest) Act 1998 applies as it stands: statutory interest and £40, £70 or £100 fixed compensation.
Last reviewed:
The left column is the law today in England and Wales. The right column is what the Bill proposes, as described by the government. It can still be amended in Parliament, and none of it applies until it is passed and brought into force.
| Topic | In force today | Planned (not law) |
|---|---|---|
| Payment terms | No outright cap. Your contract sets the due date, but a term of more than 60 days only counts for statutory interest if it was expressly agreed and is not grossly unfair to the supplier. If no date was agreed, payment is late 30 days after the later of delivery and the invoice. | A maximum payment term of 60 days, with strictly limited exemptions. |
| Late payment interest | Statutory interest at 8 percentage points above the reference rate applies to business-to-business debts, unless the contract provides a substantial contractual remedy for late payment. | Interest on late payment made mandatory, at 8 percentage points above the Bank of England base rate, as proposed. |
| Fixed compensation | £40, £70 or £100 per invoice, depending on the size of the debt. | In addition, a right to a fixed sum where the buyer raises a dispute late or without enough information. |
| Small Business Commissioner | Looks at complaints from small businesses about late payment by larger ones and makes recommendations. It cannot fine. | Powers to investigate larger businesses suspected of persistent poor payment practice, to adjudicate payment disputes, and to fine. |
| Construction retentions | Allowed where the contract provides for them. | Deducting and withholding retention payments banned, with timing to be consulted on. |
| Reporting | Large companies publish reports on their payment practices and performance. | Large companies also report interest paid and owed, and the boards of persistent late payers must publish an explanation. |
Some articles describe the 60-day cap as if it already applies. It does not. A Bill only becomes law after both Houses pass it and it receives Royal Assent, and this one also needs commencement before any of it takes effect.
Government consultation on tackling poor payment practices.
Government response to the consultation confirms the package.
Commercial Payments Bill introduced in the House of Lords.
Second reading in the House of Lords.
Committee stage in the House of Lords.
Report stage in the House of Lords (scheduled to begin on this date).
The remaining Lords stages, all stages in the House of Commons, Royal Assent, then commencement after a transition period.
Claim what the 1998 Act gives you. On a late business-to-business invoice you can add statutory interest and a fixed sum of £40, £70 or £100. Work out the figure for your invoice or read how the Act works.
Say so on your invoices. A line stating that you reserve the right to claim interest and compensation under the Act is a statement of the rules, not a threat, and keeps the choice with you.
Look at your own payment terms. If you offer customers more than 60 days, it may be worth deciding now whether to shorten them, rather than waiting to see whether the cap becomes law.
If a larger business owes you money, the Small Business Commissioner can already look at a complaint about late payment. It is free.
Every source was checked on 24 September 2026. This page is general information, not legal advice. If a debt is disputed, speak to a solicitor.
No. The 60-day maximum payment term is in the Commercial Payments Bill, which was introduced in the House of Lords on 19 May 2026. As of 24 September 2026 it has not completed its passage through Parliament, and even after Royal Assent the government has said there will be a lead-in period before the new rules apply.
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can already claim statutory interest at 8 percentage points above the Bank of England reference rate, plus fixed compensation of £40, £70 or £100 per invoice, from another business that pays late. You do not need to wait for the reforms.
There is no date yet. The government's March 2026 consultation response proposed a gradual change with a transition period, starting with 60 days and no earlier than 2027. The Bill has to pass both Houses of Parliament and receive Royal Assent, and the government has said it will give businesses a lead-in time before the powers come into force.
RobinReturn is software, not a law firm, and does not give legal advice. Start with a reminder that states the debt, the interest and the compensation.
For undisputed invoices up to £10,000 owed by another business in England or Wales.
Related guidesThe Late Payment of Commercial Debts Act, explained · How to recover an unpaid invoice (step by step) · What to do when a customer will not pay · All guides