UK corporate reporting – Summary of payment practices in annual reports

Regulations have been made under which in-scope companies will be required to include certain information regarding their payment practices in their annual report and accounts.

The new annual report requirements are in addition to the current payment practices regime which was introduced in 2017. The current regime requires companies to disclose twice a year via a government website certain information in relation to “qualifying contracts”, which broadly are contracts for goods, services (other than financial services) or intangible property between two or more businesses with a sufficient nexus to the UK. It applies to large companies, that is those meeting two of the three size thresholds for large companies set out in the Companies Act 2006.

The government consulted on including payment practices reporting in the annual report and concluded that companies should be required to include certain summary information on their payment practices in their annual report (alongside the existing requirements outlined above). The Companies (Directors’ Report) (Payment Reporting) Regulations 2025 therefore make amendments to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2018 to require a company’s directors’ report to include:

• information on the payment period (expressed in days) in the company’s standard payment terms with suppliers and where the company has varied those standard terms in the financial year, details of the variation and any notification or consultation carried out by the company with suppliers prior to the change;
• a statement of the average number of days taken to make payments under the qualifying contracts within the financial year and the percentage and sum total of payments made:
  • within 30 days;
  • between 31 and 60 days; and
  • on or after 61 days,

after the day on which notice for payment is received; and

• a statement of the percentage and sum total of payments not made within the contractual payment period.

The information required to be included in the annual report and accounts under the Regulations must cover the whole of the financial year and where a consolidated group directors’ report is prepared for the financial year, information needs to be included in the parent company’s group accounts covering all in-scope subsidiaries.

The Regulations come into force with effect from financial years beginning on or after 1 January 2026.

For further details on the payment practices regime, please see our snapshot here.