From 1 January 2026, large UK companies will face new annual reporting obligations relating to their supplier payment practices. These disclosures must be included in the directors’ report and are designed to improve transparency and allow stakeholders, such as investors, to better assess how businesses manage supplier payments.
What’s changing?
In October 2025, the Government introduced the Companies (Directors’ Report) (Payment Reporting) Regulations 2025 (SI 2025/1152). These regulations amend the existing Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) and require large companies to report annually on their payment practices and performance.
This is in addition to the current requirement for in-scope companies to publish payment data twice a year on the Government’s online portal. The new rules differ from previous directors’ report disclosures that were withdrawn several years ago.
Who is affected?
The requirements apply to UK-incorporated companies that meet two of the following three criteria under the Companies Act (after their first financial year):
- Turnover: £36 million or more
- Balance sheet total: £18 million or more
- Employees: 250 or more
Exemptions apply for subsidiaries if:
- They are included in the parent company’s group directors’ report; and
- The parent’s report covers the same or an earlier financial year
Group directors’ reports must cover the parent and its consolidated subsidiaries, but certain exclusions apply (e.g. non-UK entities or subsidiaries that are not ‘large’).
What must be reported?
Companies must include a statement in the directors’ report covering:
- Standard payment terms
- The payment period (in days) specified in qualifying supplier contracts
- Details of any changes to these terms during the year and whether suppliers were consulted
- Payments made during the year
- Average number of days taken to pay suppliers
- Percentage and total value of payments made:
- Within 0–30 days
- Within 31–60 days
- After 61 days
- Payments due during the year
- Percentage and total value of payments not made within the agreed payment period.
The definition of a qualifying contract mirrors that used for the Government portal and excludes certain agreements (e.g., financial services or contracts not sufficiently linked to the UK). Further guidance is expected from the Government.
When does it apply?
The new disclosures apply to financial years beginning on or after 1 January 2026.
Future uncertainty
The Government’s recent Regulation Action Plan announced plans to remove the requirement for a directors’ report, with some provisions relocated elsewhere in the annual report. It is unclear how this will affect the new supplier payment disclosures, so businesses should monitor developments closely.
What should companies do now?
- Review existing payment practices and ensure accurate data collection
- Update internal reporting processes to capture the required metrics
- Stay informed about forthcoming Government guidance and any changes to the directors’ report requirements
Get in touch
Our expert team is here to guide you through the complexities of regulation and compliance, ensuring that you meet your statutory obligations. For further information or to discuss your individual circumstances, please contact Ceri Dixon using the button below.
