Get Paid on Time: UK Construction Payment Guides

The Housing Grants, Construction and Regeneration Act 1996 (amended 2011) gives contractors the right to stage payments and sets out strict notice deadlines. If clients miss these deadlines, they must pay the full amount applied for. Understanding and tracking these dates protects your cashflow.

A Payment Notice states how much the payer intends to pay and the basis for that calculation. Under the Construction Act, it must be issued within 5 days of the due date (unless the contract specifies otherwise). If no notice is issued, the amount in the application becomes due.

A Pay Less Notice allows the payer to pay less than the notified sum if they have valid reasons (like defects or contra charges). It must be issued at least 7 days before the final date for payment and must specify the amount to be paid and the basis for calculation.

Payment deadlines depend on your contract type (JCT, NEC, bespoke) and specific terms. Generally: Application date + due date offset = Due Date. Due Date + 5 days = Payment Notice deadline. Final Date - 7 days = Pay Less Notice deadline. Use our free calculator to work out exact dates.

Retention is a percentage (typically 5%) withheld from interim payments as security for defects. Half is usually released at practical completion, the remainder at the end of the defects liability period. Tracking retention across multiple projects is critical for cashflow planning.

Our templates are designed to meet Construction Act requirements and follow industry best practice. However, always check your specific contract terms and consult legal advice for complex situations. The templates are provided as guidance, not legal advice.