A bill to make provision about payment terms in commercial contracts; to make provision about interest on late payment of commercial debts; to ban retention clauses in the construction sector; to expand the powers of the Small Business Commissioner in relation to payment disputes and poor payment practices; to amend the Enterprise Act 2016 in connection with other functions of the Small Business Commissioner; and for connected purposes.
House of Lords
21 May 2026
May contain errors — check source documents for definitive information.
The Commercial Payments Bill aims to speed up and standardise how money is paid in business-to-business contracts. It sets default payment terms of 60 days (30 days for payments by public authorities), bans retention clauses in construction after a transition period, and introduces a statutory simple interest on late payments. It also strengthens the Small Business Commissioner so it can settle disputes between small and large businesses, investigate poor payment practices and enforce the rules, with some technical details left to ministers by delegated powers and cross‑jurisdictional changes.
The bill is currently at the Lords’ 2nd Reading (9 June 2026). The accompanying Explanatory Notes, Bill text and Delegated Powers Memorandum outline the core measures and how ministers would set technical details and exemptions; no committee amendments are recorded publicly yet.
Generated 20 May 2026
19 May 2026
9 Jun 2026
First reading took place on 19 May. This stage is a formality that signals the start of the bill's journey through the Lords.
What happens next?
Second reading - the general debate on all aspects of the bill - is scheduled for 9 June.
The Commercial Payments Bill would cap payment terms at 60 days (30 days for public authorities), ban retention sums in construction, and extend the Small Business Commissioner’s powers to adjudicate disputes and investigate poor payment practices, with penalties where appropriate. It relies on multiple delegated powers for ministers to set exemptions, define company sizes, regulate the SBC scheme and investigations, impose penalties, and transfer SBC functions (including some Henry VIII powers), all subject to affirmative parliamentary scrutiny and devolved-consent. The memorandum justifies these delegated powers as necessary for technical detail and practical flexibility, and outlines Parliament’s oversight mechanisms.
The Commercial Payments Bill would tighten how quickly debts must be paid by setting a 60-day limit for most contracts (30 days for payments by public authorities, with exemptions) and ensuring statutory interest can’t be waived. It would ban retention clauses in construction contracts, introduce a transition period for existing arrangements, and add a fixed-sum remedy for unauthorised retentions. It also strengthens the Small Business Commissioner with powers to adjudicate disputes between small and large businesses, investigate large‑business payment practices, enforce reporting on payment practices, and impose penalties where rules are breached.
The bill would overhaul how and when payments are due under contracts, setting a default payment window of 30 days for public authorities and 60 days otherwise, with an implied payment term and a new regime for construction payments; it also establishes a statutory simple interest framework on debts. It creates a Small Business Commissioner adjudication scheme to resolve relevant payment disputes between small and larger businesses and introduces powers for investigations, publication and enforcement directions, and penalties for poor payment practices. It also reforms construction retentions (113A–113F), including a move to curb or ban retention clauses after a transition, and it makes cross‑jurisdictional amendments across England, Wales, Scotland and Northern Ireland, including potential transfer of SBC functions.
No recorded votes for this bill yet.
