Top Service News
Legal Changes Every Construction Supplier Needs to Know
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Staying Ahead of New Rules That Could Impact Your Payments, Contracts, and Credit Risk
In an industry already facing rising material costs, tighter margins, and late payments, staying informed about legislative changes isn’t just good practice — it’s essential to protecting your cash flow.
At Top Service Ltd, we specialise in credit management solutions tailored to the UK construction sector. Here’s a clear guide to what’s changing in 2025 — and how to protect your business from unnecessary risk.
1. Construction Act: Know Your Rights on Payment
The Housing Grants, Construction and Regeneration Act 1996 (often called the Construction Act) gives subcontractors and suppliers the right to fair payment terms and a dispute resolution process via adjudication.
Key reminders:
- Payment terms must be clearly defined in the contract.
- You’re entitled to interim payments on longer-term contracts.
- If payment is late, you’re legally allowed to suspend work after serving notice.
2. Fair Payment Code: Moving Beyond the Prompt Payment Code
In 2024, the government introduced the Fair Payment Code — evolving from the Prompt Payment Code — to hold larger firms accountable for how they treat suppliers and subcontractors.
Key changes:
- Large businesses must publicly report their actual payment performance.
- Public sector buyers are being encouraged to exclude poor payers from major frameworks.
- There is a growing move toward 30-day payment terms as standard, especially for SMEs.
What this means for you:
If you’re being paid late, you may be able to use this new code to put pressure on clients, especially where public contracts are involved.
Top Service can support: Our members get access to real-time credit information, so you can track which contractors are falling behind before it affects your business.
3. Companies House Reform: Identity Checks and Transparency
As part of the Economic Crime and Corporate Transparency Act 2023, changes at Companies House are rolling out through 2025 to improve corporate accountability.
What’s changing:
- Identity verification for all directors and PSCs (people with significant control) — stopping fake or hidden entities.
- Companies House gains more powers to challenge and remove false or misleading information.
- More cross-checking between agencies (e.g. HMRC) for red-flagged behaviours.
Why this matters:
You’ll be better able to trust the details you’re seeing in public filings — and if something doesn’t look right, it’s a strong sign to carry out more in-depth credit checks.
Top Service tools: We cross-reference real-time trade payment data with Companies House filings — helping you spot discrepancies early.
4. Changes to Insolvency and CVAs (Coming Later in 2025)
While nothing is confirmed yet, the UK Government is consulting on tighter regulations around Company Voluntary Arrangements (CVAs) and pre-pack administrations. These measures aim to:
- Improve transparency for unsecured creditors
- Prevent “phoenixing” — where directors walk away from debts and restart under a new company
- Strengthen creditor rights in restructuring
Construction relevance:
Historically, the industry has seen contractors leave behind debts through CVAs, often hitting suppliers hardest. These reforms aim to reduce that risk — but they’ll need enforcement.
In 2024, the average dividend from construction insolvencies was under 6p per £1 owed.
Our role: We monitor and alert you to early warning signs of financial troubles, insolvency filings, payment suspensions, and creditor meetings involving your customers — in real time.
5. Contract Clauses and Legal Enforcement: It Starts With Strong Terms
Poorly written contracts are one of the most common reasons payment disputes end badly. The legal landscape is evolving, but your own paperwork is your first line of defence.
Does your contract:
- Define clear payment milestones and penalties for delay.
- Include interest charges and legal recourse if payments are missed?
- Require personal guarantees from directors where appropriate?
Summary: Stay Compliant, Stay Paid
Legal changes can feel abstract, but for UK construction firms, the implications are very real:
- Get paid faster
- Avoid bad debt
- Reduce legal and financial risk
- Spot trouble before it starts
Need help reviewing your contracts or chasing overdue payments?
We’re the UK’s only credit management specialists focused solely on the construction sector.
📞 Arrange a demo call
📩 Ask a credit expert
👉 www.top-service.co.uk
☎ 01527 503990
📨 info@top-service.co.uk
