Large UK companies are required to disclose payment practices and performance in respect of the financial suppliers. Details of payment terms, performance metrics, and supplier payment practices must be disclosed in the directors' report for financial years beginning on or after 1 January 2026.

These requirements aim to improve payment times across the UK. They sit alongside existing reporting requirements for in-scope companies to report payment practices and performance through the government's payment reporting service at least twice a year.

Requirements for large UK companies

All large UK companies are in scope after their first financial year, with exemptions available in the case of certain subsidiary undertakings. These regulations do not apply to LLPs.

A company qualifies as large when it exceeds two of the three following size criteria for two years in a row:

Requirements for groups

A subsidiary undertaking is exempt if it is included in a UK group directors’ report, provided the group’s financial year ends at the same time as, or before the end of, the subsidiary undertaking’s financial year.

If the directors’ report is a group directors’ report, the group is exempt from including any information which relates to subsidiary undertakings that themselves would be exempt from disclosure in their own right. Therefore, if a subsidiary is any of the following, it should be excluded from the consolidated disclosure in the group directors’ report:

• In its first financial year

• Not a large company

• A non-UK entity

What needs to be reported in the directors’ report?

Companies within scope will be required to include specific disclosures on their payment terms and payment performance arrangements with suppliers. The information is intended to provide greater transparency over how promptly companies pay their suppliers and whether payments are being made in accordance with agreed terms. The required disclosures in the directors’ report are summarised below.

1. A statement describing:

• The payment period specified in the company’s standard payment terms in its qualifying contracts between it and its suppliers, expressed in days

• Where the company varied the standard payment terms in its qualifying contracts between it and its suppliers in the financial year, including:

  • Details of the variation

  • Details of any notification or consultation conducted by the company with its suppliers before making the variation

2. In relation to the payments made under qualifying contracts within the financial year, firms must provide a statement of:

• The average number of days taken to make such payments, where day 1 is the first day after the relevant day

• The percentage of those payments which were made, where day 1 is the first day after the relevant day, including:

  • Those within the period beginning with day 1 and ending with day 30

  • Those within the period beginning with day 31 and ending with day 60

  • Those on or after day 61

• The sum total of those payments which were made, where day 1 is the first day after the relevant day including:

  • Those within the period beginning with day 1 and ending with day 30

  • Those within the period beginning with day 31 and ending with day 60

  • Those on or after day 61

3. In relation to the payments under qualifying contracts that fall due within the financial year, firms must include:

• A statement of the percentage of these payments which were not made within the payment period

• A statement of the sum total of these payments which were not made within the payment period

For the purposes of these disclosures, a qualifying contract is a contract that is either:

• Governed by the law of part of the UK otherwise than by the choice of the parties

• Governed by the law of part of the UK by choice of the parties, where:

  • The contract has a significant connection with that part of the UK

  • The contract would still be governed by the law of a part of the UK if that choice had not been made UK

• Governed by the law of a country outside the UK by choice of the parties where:

  • The contract would otherwise be governed by the law of a part of the UK

  • The contract does not have significant connection with any other country outside the UK

Note: A qualifying contract is not a contract for financial services (as defined in section 2 of the Small Business, Enterprise and Employment Act 2015).

Where do I find more details?

For more information on supplier payment disclosure requirements, what needs to be submitted, and any exemptions that may apply, please use the form below to speak with one of our experts.