The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are amended in accordance with regulations 3 to 5.
These Regulations, made under powers provided by the Companies Act 2006, amend the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to introduce new requirements for large companies to report specific details regarding their B2B payment practices and performance within their Directors’ Reports, effective for financial years starting on or after January 1, 2026.
Arguments For
Mandates transparency regarding payment practices, forcing large companies to publicly disclose how quickly they pay their suppliers.
Aims to improve the financial stability and cash flow for suppliers, particularly smaller businesses, by imposing reporting scrutiny on late payments.
Requires disclosure of standard payment terms and any variations made during the financial year, promoting fairness in contractual agreements.
Introduces scheduled review mechanisms (every 5 years) to ensure the reporting requirements remain relevant and effective over time.
Arguments Against
Imposes new administrative and compliance burdens on large companies to gather, calculate, and report detailed payment statistics, potentially increasing overhead costs.
The definitions for 'qualifying contract' and 'payment made' (especially concerning finance providers) introduce complexity that might lead to inconsistent application or reporting loopholes.
Exempting medium-sized companies might create an uneven playing field or allow larger, albeit slightly smaller, companies to avoid the new disclosure requirements.
The requirement for the first report by April 6th, 2029, creates a significant time lag between the regulation coming into force (Jan 1, 2026) and the initial required publication.
The Secretary of State makes these Regulations in exercise of the powers conferred by sections 416(4) and 1292(1) of the Companies Act 2006.
In accordance with sections 473(3) and 1290 of the Companies Act 2006, a draft of this instrument has been laid before Parliament and approved by a resolution of each House of Parliament.
The Secretary of State enacted these Regulations using specific powers granted by the Companies Act 2006 for corporate reporting rules.
Before becoming law, a draft version of this statutory instrument was formally presented and approved by both Houses of the UK Parliament, as required by sections 473(3) and 1290 of the same Act.
Citation, commencement, extent and application1.
This section covers the formal naming, timing, geographical scope, and initial applicability of these rules.
(1)
These Regulations may be cited as the Companies (Directors’ Report) (Payment Reporting) Regulations 2025.
The official title of these legal rules is the Companies (Directors’ Report) (Payment Reporting) Regulations 2025.
(2)
These Regulations come into force on 1st January 2026.
The regulations officially become effective starting on January 1, 2026.
(3)
These Regulations extend to England and Wales, Northern Ireland and Scotland.
These rules apply across the jurisdictions of England and Wales, Northern Ireland, and Scotland.
(4)
These Regulations have effect in respect of a company’s financial year beginning on or after 1st January 2026.
The requirements within these regulations apply only to a company's financial year that commences on or after January 1, 2026.
Amendment to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 20082.
This section states that the core changes detailed in Regulations 3, 4, and 5 will modify the existing Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
Amendment of regulation 10 (directors’ report)3.
In regulation 10(2)—
(a)
after “unquoted companies,” omit “and”,
(b)
at the end of the entry relating to Part 8, omit the full stop and insert—
“, and
Part 9 relates to a company’s payment practices and performance in respect of payments made by the company to its suppliers.
This modifies regulation 10 of the 2008 Regulations, which relates to the contents of the Directors' Report.
The amendment removes the word 'and' after the item relating to Part 8 and inserts a new requirement for the addition of Part 9, specifying that Part 9 concerns disclosures about a company’s practices and performance when paying its suppliers.
Amendment of regulation 14 (review)4.
This section details changes made to Regulation 14 of the 2008 Regulations, which deals with mandated reviews of the reporting requirements.
(1)
Regulation 14 is amended as follows.
Regulation 14 of the 2008 Regulations is being modified according to the subsequent subsections of current Regulation 4.
(2)
In paragraph (1)—
(a)
at the end of sub-paragraph (a)(ii), omit “and”;
(b)
after sub-paragraph (a)(iii), insert—
(iv)
the Companies (Directors’ Report) (Payment Reporting) Regulations 2025, and”.
In paragraph (1) of Regulation 14, the existing list of regulations subject to review is updated.
The new payment reporting regulations are inserted as sub-paragraph (iv) in the list, making them subject to the review mandate.
(3)
After paragraph (4B), insert—
(4C)
The first report under paragraph (1)(a)(iv) must be published on or before the 6th April 2029.
A new paragraph (4C) is added, setting a deadline for the initial compliance review.
The first report concerning the newly introduced payment reporting requirements (referenced as paragraph (1)(a)(iv)) must be publicly issued no later than April 6, 2029.
(4)
In paragraph (5), for “paragraphs (1)(a)(i) to (iii)”, substitute “paragraph (1)(a)(i) to (iv)”.
Paragraph (5) of Regulation 14 is updated to ensure its scope correctly references the full list of reviewed regulations, now including the new payment reporting regulations up to (iv).
Insertion of Part 9 of Schedule 75.
After Part 8 to Schedule 7, insert—
“Part 9DISCLOSURES CONCERNING PAYMENT PRACTICES AND PERFORMANCE IN RESPECT TO SUPPLIERS
28.
(1)
Subject to paragraphs 29 and 30, the directors’ report for a financial year must contain the information specified by sub-paragraphs (2), (3) and (4).
(2)
A statement describing—
(a)
the payment period specified in the company’s standard payment terms in its qualifying contracts between it and its suppliers, expressed in days;
(b)
where the company varied the standard payment terms in its qualifying contracts between it and its suppliers in the financial year—
(i)
details of the variation; and
(ii)
details of any notification or consultation conducted by the company with its suppliers before making the variation.
(3)
In relation to the payments made under qualifying contracts within the financial year, a statement of—
(a)
the average number of days taken to make such payments, where day 1 is the first day after the relevant day;
(b)
the percentage of those payments which were made, where day 1 is the first day after the relevant day—
(i)
within the period beginning with day 1 and ending with day 30;
(ii)
within the period beginning with day 31 and ending with day 60;
(iii)
on or after day 61;
(c)
the sum total of those payments which were made, where day 1 is the first day after the relevant day—
(i)
within the period beginning with day 1 and ending with day 30;
(ii)
within the period beginning with day 31 and ending with day 60;
(iii)
on or after day 61.
(4)
In relation to the payments under qualifying contracts that fall due within the financial year—
(a)
a statement of the percentage of these payments which were not made within the payment period; and
(b)
a statement of the sum total of these payments which were not made within the payment period.
29.
The directors’ report for a company is not required to contain the information specified by paragraph 28 where the report is for—
(a)
the company’s first financial year, or(b)
a subsequent financial year in relation to which the company qualifies as medium-sized.30.
(1)
Paragraph 28 does not apply if—
(a)
the company is a subsidiary undertaking at the end of the financial year;
(b)
the company is included in the group directors’ report of a parent undertaking; and
(c)
the group directors’ report is prepared for a financial year of the parent undertaking that ends at the same time as, or before the end of, the company’s financial year.
(2)
If the directors’ report is a group directors’ report, paragraph 28 has effect as if references to the company were references to the company and its subsidiary undertakings included in the consolidation.(3)
The company may exclude from the group directors’ report any information which relates to a subsidiary undertaking, if that undertaking would not be required to include the information in its directors’ report by virtue of paragraph 29.31.
For the purposes of this Part—
a payment falls due on the last day of the payment period;
subject to sub-paragraph (d), a payment is made—
(i)
when it is received by the supplier, unless sub-paragraph (c) applies, or
(ii)
where sub-paragraph (c) applies, when it is received by the finance provider from the company;
this sub-paragraph applies if there is an arrangement under which—
(i)
the supplier receives part payment of an invoiced sum from a finance provider before the end of the payment period; and
(ii)
the company pays the invoiced sum to the finance provider;
where there is any delay in the payment or of any part of the payment being received for which the company is not responsible, the payment is deemed to have been made when it would have been received without that delay.
32.
(1)
For the purposes of this Part, a qualifying contract is a contract which satisfies sub-paragraphs (2) and (3).
(2)
The first condition is that the relevant contract is not a contract for financial services, as defined in section 2 of the Small Business, Enterprise and Employment Act 2015.(3)
The second condition is that the relevant contract is—
(a)
governed by the law of part of the United Kingdom otherwise than by the choice of the parties;
(b)
governed by the law of part of the United Kingdom by choice of the parties, and—
(i)
has a significant connection with that part of the United Kingdom; or
(ii)
without that choice, its applicable law would still be the law of a part of the United Kingdom; or
(c)
governed by a foreign law by choice of the parties and—
(i)
without that choice, its applicable law would be the law of a part of the United Kingdom; and
(ii)
has no significant connection with any other country outside the United Kingdom.
(4)
In this paragraph “foreign law” means the law of a country outside the United Kingdom.
33.
For the purposes of this Part of this Schedule—
“average” means the arithmetic mean;
“finance provider” means a body corporate that—
(a)
lends money or provides credit in the course of a business,
(b)
arranges or facilitates the provision of debt or equity finance in the course of a business, or
(c)
provides, arranges or facilitates invoice discounting or factoring in the course of a business;
“invoiced sum” means a sum payable under an invoice;
“qualifying contract” has the meaning given in paragraph 32
“payment period” means the period in which a company is contractually required to pay a sum;
“relevant day” means the day on which a company receives an invoice or otherwise has notice of an amount for payment;
“standard payment terms” means, in relation to a qualifying contract—
(a)
the standard terms relating to payment that the company uses, or
(b)
where the company does not use standard terms, the company’s most frequently used payment terms.”.
This is the main amending part, inserting a new Part 9 into Schedule 7 of the 2008 Regulations, dedicated to 'Disclosures Concerning Payment Practices and Performance in Respect to Suppliers.'
Paragraph 28 outlines the specific data required in the Directors' Report, including standard payment terms (2), average payment time and distribution of payments (made vs. overdue) against 30/60/90-day thresholds (3), and the percentage and total value of payments that missed the agreed period (4).
Paragraph 29 exempts a company's first financial year and subsequent financial years where the company qualifies as medium-sized from these requirements.
Paragraph 30 addresses group reporting: if a company is a subsidiary included in a parent company's group report covering the same period, the requirement is met at group level, avoiding duplicate reporting, though exclusions for subsidiaries that would meet the medium-sized exemption are permitted.
Paragraph 31 defines key concepts for calculation: 'payment due' is the last day of the payment period; 'payment made' generally occurs when the supplier receives it, but special rules apply if a finance provider is involved in early payment schemes; and delays outside the company's control are ignored when calculating performance.
Paragraph 32 defines a 'qualifying contract' as generally excluding financial services contracts and specifying UK jurisdictional links (by law or choice) that bring a contract under these rules.
Paragraph 33 provides definitions for terms used throughout Part 9, such as 'average,' 'finance provider,' 'payment period,' and how 'standard payment terms' are determined.
Blair McDougall Parliamentary Under-Secretary of State Department for Business and Trade 30th October 2025
This section records the signing authority for the regulations, identifying Blair McDougall as the Parliamentary Under-Secretary of State for the Department for Business and Trade, and notes the date of signing.
Explanatory Note (This note is not part of the Regulations) These Regulations make changes to the reporting requirements in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the “2008 Regulations”) to require large companies to report information about their payment practices and performance within Directors’ Reports. These Regulations extend to the whole of the United Kingdom reflecting the extent of the Companies Act 2006 (the “2006 Act”).
Regulation 4 amends regulation 14 of the 2008 Regulations to provide that these new provisions will be subject to a review by the Secretary of State every 5 years.
Regulation 5 inserts a new Part 9 of Schedule 7 to the 2008 Regulations to provide new requirements on large companies to make statements in the directors’ report concerning the company’s payment practices and performance by them.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The Explanatory Note clarifies that the purpose is to mandate specific supplier payment reporting by large companies within their Directors' Reports, amending the 2008 Regulations across the scope of the Companies Act 2006 (UK-wide).
It confirms that Regulation 4 ensures these new rules will undergo a mandatory review every five years.
Furthermore, Regulation 5 inserts the detailed reporting requirements into Schedule 7.
The government anticipates that these changes will have no significant economic impact on the private, voluntary, or public sectors.
Latest Legislation
The Companies (Directors’ Report) (Payment Reporting) Regulations 2025
5th Nov 25
The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) (No. 2) Order 2025
4th Nov 25
The Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) (Amendment) Regulations 2025
4th Nov 25
The Economic Crime (Anti-Money Laundering) Levy (Amendment) Regulations 2025
4th Nov 25
The Net Zero Teesside (Amendment) Order 2025
4th Nov 25