In short
- Applies to large companies for financial years beginning on or after 1 January 2026. In force since 1 January 2026.
- The directors' report must describe the standard payment terms (in days) and any changes in the year, with how suppliers were told or consulted.
- It must give the average days to pay, the percentage and value of payments made within 30 days, in 31 to 60 days and from day 61, and the percentage and value not paid within terms.
- It covers the whole financial year, on top of the two half-yearly reports on the GOV.UK service.
- Not for LLPs, first financial years or medium-sized companies; subsidiaries covered by a parent's group directors' report are exempt.
What the directors' report must contain
SI 2025/1152 inserts a new Part 9 into Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. Paragraph 28 requires:
| Statement | Detail |
|---|---|
| Standard payment terms | The payment period in the company's standard payment terms for qualifying contracts with suppliers, in days. If the company used no standard terms, its most frequently used terms. |
| Changes to terms | Where standard terms were varied in the year: details of the variation and of any notice to, or consultation with, suppliers beforehand. |
| Average time to pay | The average (arithmetic mean) number of days taken to make payments under qualifying contracts in the year, counting day 1 as the first day after the relevant day. |
| Payments by band: share | The percentage of those payments made within days 1 to 30, days 31 to 60, and on or after day 61. |
| Payments by band: value | The sum total of payments in each of the same three bands. |
| Not paid within terms | Of payments falling due in the year: the percentage, and the sum total, not made within the payment period. |
Key definitions (paragraphs 31 to 33)
- Relevant day: the day the company receives an invoice or otherwise has notice of an amount for payment.
- Payment made: when the supplier receives it; with supply-chain finance, when the finance provider receives the company's payment. Delays the company is not responsible for are disregarded.
- Falls due: on the last day of the payment period.
- Qualifying contract: not a financial services contract, and governed by UK law (with connection tests where the law was chosen).
Sources: SI 2025/1152 on legislation.gov.uk (made 30 October 2025); GOV.UK, "Guidance to reporting on payment data in directors' reports" (30 December 2025).
Who has to include it
Companies that are not small or medium-sized under sections 465 and 466 of the Companies Act 2006. GOV.UK's guidance gives the thresholds at the time of publishing: a company is not medium-sized if it exceeds two or more of £54 million turnover, £27 million balance sheet total and 250 employees (parent companies use group aggregates).
- First financial year: not required (paragraph 29).
- Medium-sized for the year: not required.
- Subsidiaries: not required where the company is included in the parent's group directors' report for a financial year ending at the same time or before; the group report then covers the company and its consolidated subsidiaries (paragraph 30).
- LLPs: outside these regulations.
How it fits with half-yearly reporting
The half-yearly reports under SI 2017/395 continue: two reporting periods a year, each published on the GOV.UK service within 30 days of the period end. The directors' report statements use the same building blocks over the whole financial year, so the working for both should come from the same invoice data.
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Questions
When does the directors' report payment requirement start?
For financial years beginning on or after 1 January 2026 (SI 2025/1152, regulation 1(4)). For a calendar-year company, the first directors' report affected covers the year to 31 December 2026.
Does it apply to LLPs?
No. GOV.UK guidance says these regulations do not apply to limited liability partnerships. LLPs still publish half-yearly payment practices reports under SI 2017/425.
Which companies are exempt?
A company in its first financial year, a company that qualifies as medium-sized for the year, and a subsidiary included in a parent's group directors' report for a financial year ending at the same time or before (Schedule 7, Part 9, paragraphs 29 and 30).
Is "average" the mean or the median?
The arithmetic mean (paragraph 33).
Do auditors look at it?
GOV.UK guidance notes that auditors must state whether the directors' report is consistent with the audited accounts and whether they have identified material misstatements in it.
Information, not legal or accounting advice. The interpretation of the law is ultimately a matter for the courts.