Late payments bill announced in King's speech

Today's King's Speech included something for freelancers!

The government has confirmed it will introduce the Small Business Protections (Late Payments) Bill, and a welcome change to support small businesses and freelancers in tackling late payments.

After a significant consultation process last year, (we hosted a roundtable with some of our community members to chat with the policy team exploring the challenges freelancers face with late payments), the government has announced a package of measures to tackle late payments - a problem worth £11 billion to the UK economy.

The speech described it as "the most significant legislation to tackle late payments in over 25 years", with a package of specific, enforceable measures:

1/ A 60-day cap on payment terms

Large businesses will no longer be able to quietly agree to longer payment terms in a contract.

2/ Mandatory interest on late payments at 8% above Bank of England base rate

Whilst the right to charge interest already exists in law, this makes it apply by default, rather than a lever freelancers can pull to encourage payment.

How this will be enforced is yet to be explained, but it could be a positive in that freelancers won't be the 'bad guy' in asking for interest, it's a legal obligation.

3/ A time limit for raising invoice disputes

One of the common problems we see freelancers face is the client raising a dispute after the due date has passed. It resets the clock, moves the goalposts, and puts the burden back on the person who did the work. A formal time limit on when disputes can be raised closes that loophole.

4/ Boards held accountable for poor payment performance

Persistently late-paying large companies will be required to publish commentary on their payment performance and what they intend to do about it - at board or audit committee level. Whilst this will really only affect larger companies, it's often large companies to small suppliers where this is felt the most.

5/ New powers for the Small Business Commissioner

The Small Business Commissioner will gain the ability to:

• Investigate businesses suspected of poor payment practices
• Adjudicate payment disputes outside of the court process
• Levy financial penalties on persistent late payers

The Commissioner recovered over £1.55 million for small businesses in 2025-26, more than the previous four years combined. With proper enforcement powers, that number should be substantially higher.

Why this matters for freelancers

Late payments aren't a minor inconvenience. They are a cash flow crisis, a mental health issue, and a structural problem that disproportionately affects the self-employed.

Over 70% of freelancers experienced late payments last year. Founders spend over 86 hours a year chasing overdue invoices. The total cost to the UK economy is estimated at £11 billion annually.

What we don't know yet

Legislation announced in a King's Speech still has to pass through Parliament, turn in to law, and of course, be enforced. There are lots of questions on this part: how do freelancers actually apply these changes in practice, especially around mandatory interest.

But, this is a positive step in the right direction, and hopefully one which improves the attitude and behaviours of businesses towards paying their suppliers on time.