Payment Notice & Pay Less Notice Templates (UK Construction Act)

Payment Notices and Pay Less Notices are critical documents under the UK Construction Act. Getting them wrong, or missing deadlines, can cost you money and damage client relationships. This guide explains what each notice is, when to issue them, and provides free templates you can use immediately.

What is a Payment Notice?

A Payment Notice is a document issued by the payer (usually the client or main contractor) stating how much they intend to pay for a payment application and the basis for that calculation. Under the Construction Act 1996 (as amended 2011), if no Payment Notice is issued by the deadline, the amount in the payee's application becomes the "notified sum" and must be paid in full.

• Must state the sum the payer considers due
• Must specify the basis on which that sum is calculated
• Must be issued within 5 days of the due date (unless contract specifies otherwise)
• If not issued, the applied sum becomes due in full

What is a Pay Less Notice?

A Pay Less Notice allows the payer to pay less than the notified sum (whether from a Payment Notice or a default application). This might be due to defects, contra charges, liquidated damages, or other deductions. Without a valid Pay Less Notice, the full notified sum must be paid.

• Must be issued at least 7 days before the final date for payment
• Must state the sum the payer considers due
• Must specify the basis for calculating that sum
• Without it, the full notified sum is payable

Key Deadlines Under the Construction Act

The Construction Act sets out a framework of deadlines that protect both parties. Understanding these is essential for protecting your cashflow. While contracts can vary some timings, they cannot remove your statutory rights.

• Due Date: Typically 7-14 days after application (contract dependent)
• Payment Notice: Within 5 days of due date (unless contract varies)
• Pay Less Notice: At least 7 days before final date for payment
• Final Date for Payment: Typically 14-28 days after due date (contract dependent)

How to Complete a Payment Notice

A valid Payment Notice must clearly identify the payment cycle, state the amount due, and explain how that amount was calculated. Vague or incomplete notices may be invalid, leaving you exposed to paying the full applied amount.

• Reference the contract and application number
• State the valuation date and payment period
• List the gross valuation with breakdowns
• Show any deductions with reasons
• State the net amount to be paid
• Sign and date the notice

How to Complete a Pay Less Notice

A Pay Less Notice must be specific about why less is being paid. General statements like "subject to verification" are not sufficient. Each deduction needs a clear explanation.

• Reference the original application/Payment Notice
• State the amount you intend to pay
• Itemise each deduction separately
• Explain the basis for each deduction
• Ensure it's issued before the deadline
• Keep proof of delivery