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The government has reiterated its commitment to plans to crackdown on late payments and protect small businesses.
The proposals were originally outlined in 2025 as part of Labour’s new Small Business Plan.
In March 2026, Business Secretary Peter Kyle announced that the measures remain part of plans to tackle cost of living pressures for entrepreneurs and self-employed professionals.
It’s a change that IPSE – the Self-Employed Association, describes as “a major step forward” as it aims to make sure small businesses are paid on time and late payers are held to account.
They come in response to late payments costing the UK economy more than £11bn a year and leading to 38 businesses shutting down every day.
Under the new proposals, an initial maximum payment term of 60 days will be reduced to 45 days. New powers will also be awarded to the Small Business Commissioner, allowing spot checks to be carried out and the enforcement of a 30-day invoice verification period to speed up resolutions to disputes.
Mandatory interest charges will be placed on those who pay late, with the government hoping the measure will result in small businesses not only being paid on time but spend less time chasing late payments.
Mr Kyle said businesses having to shut down due to late payments is “unacceptable,” adding that the plans will transform the fortunes of small businesses.
Managing Director at IPSE, Vicks Rodwell, said: “The self-employed have dealt with late payment for so many years that many no longer expect clients to pay on time. Today’s announcement signals a real intention to shift the culture around payment, and that gives freelancers something they haven’t had for a long time: a sense that things might finally change.”
The plans remain in the outline stage, with detail of exactly how they will be implemented to come following a consultation period. It is expected that the new legislation will feature in the King’s Speech in May 2026.
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