Payments Archives

Making Tax Digital for Income Tax: What It Means for the Finishes and Interiors Sector

by Oscar Venus | 16 Oct, 2025 | Payments

From 6 April 2026, HMRC’s new Making Tax Digital for Income Tax service will come into effect, marking a major change in how self-employed individuals, including many working within the finishes and interiors sector, manage their tax.

The move is part of HMRC’s plan to modernise the tax system and reduce errors. It will be phased in over the next three years, starting with those earning over £50,000.

Under the new system, self-employed individuals will be required to:
Use HMRC-recognised software to record income and expenses
Submit quarterly updates to HMRC, helping to estimate tax bills throughout the year
Pay a single annual tax bill by 31 January

Those affected will need to check their eligibility and register in advance, as HMRC will not automatically enrol individuals in the new system.

FIS encourages members and sole traders within the sector to prepare early and review the HMRC guidance and FAQs to understand how the changes may affect them.

Government cracks down on late payment

by Clair Mooney | 2 Oct, 2025 | Payments

From 1 October 2025, companies bidding for central Government contracts over £5 million per year must now demonstrate that they pay invoices within an average of 45 days, down from 55 days. They must also continue to pay at least 95% of invoices within 60 days (90% if an action plan is provided) otherwise they will be excluded from bidding.

The guidance to PPN 018 confirms that companies must meet both of these metrics in at least one of their two previous six-month reporting periods under the Reporting on Payment Practices and Performance Regulations, although any companies that have failed to do so may submit data that has not yet been reported for the previous three or more months. Build UK’s payment performance table shows the results for more than 130 of the industry’s largest companies, and all Build UK tier one contractor members meet the new requirement to pay invoices within an average of 45 days.

The Government is consulting on further measures to tackle late payments, and we are encouraging all FIS members to have their say. The deadline for response is Thursday 23 October.

On the 9 September, FIS hosted a meeting with the Department for Business and Trade to discuss the key elements of the this consultation – you can see the full session here..FIS will be responding, but members are encouraged to feed their views into this consultation here.

Construction Payment Consultation Meeting

by Clair Mooney | 26 Sep, 2025 | Contractual and Legal, Payments

On the 9 September, FIS hosted a meeting with the Department for Business and Trade to discuss the key elements of the the government’s consultation on late payments and retentions in the construction sector that was launched on 31 July.

FIS CEO, Iain McIlwee opened the meeting explaining that this is a once in a generational opportunity to get genuine legislative support from government as opposed to weakly enforced guidance. The consultation proposes nine measures to tackle late payments, including a 60-day maximum payment term, mandatory statutory interest, and a ban or protection mechanism for retention clauses.

The aim is to legislate to improve cash flow, reduce disputes and ensure fair payment practices.

Two main proposals for retentions were debated: a statutory ban on retention clauses and a protection scheme requiring retentions to be protected in a separate bank account or insured.

In this discussion it was highlighted that whilst the ban is attractive in principle, concerns were raised about retentions being replaced by expensive bonds and legal loopholes.

The digitalisation of trust accounts combined with automatic release on clearly defined dates associated with completion of works would potentially offer a more cost effective and practical solution. It was felt that this approach would also encourage clients to consider why they hold retention and how to manage quality and remove those companies that may be holding retention purely to retain working capital and seeking to profit from complexity in the current system

You can see the full session here.

FIS will be responding, but members are encouraged to feed their views into this consultation here

CIJC Working Rule Agreement Updated with New Pay Rates

by Oscar Venus | 22 Aug, 2025 | Payments

The Construction Industry Joint Council (CIJC) Working Rule Agreement (WRA) has been updated to reflect the latest Promulgation Notice, which sets out the minimum pay rates effective from 30 June 2025.

The WRA provides a framework for pay and conditions across the construction industry and is widely recognised as an important reference point for employers and employees alike.

Members can download a free PDF version of the updated WRA and purchase hard copies directly from the CIP website

Payment Performance Update

by Oscar Venus | 13 Mar, 2025 | Payments

The requirement for larger businesses on a half-yearly basis on their payment practices, policies and performance for financial years came into effect on 6 April 2017.

Businesses are in scope of the requirement for a financial year if, on their last 2 balance sheet dates, they exceeded 2 or all of the thresholds for qualifying as a medium-sized company under the Companies Act 2006 (section 465(3)). The thresholds relate to turnover, balance sheet total and average number of employees.

At the time of publication, these thresholds are:

£54 million annual turnover
£27 million balance sheet total
250 employees

The New Government has committed to extending the scope of against the following milestones:

Changes from January 2025

Under the Reporting on Payment Practices and Performance (Amendment) Regulations 2024, new reporting requirements have been introduced for companies in scope of the reporting requirement. These new requirements will apply in relation to each financial year of a company beginning on or after 1 January 2025.

These new requirements relate to:

the sum total of payments made during the reporting period
the percentage of payments that were paid during the reporting period which were not paid within agreed terms because of a dispute

Changes from March 2025

Under the Reporting on Payment Practices and Performance (Amendment) Regulations 2025, new reporting requirements have been introduced for companies in scope of the reporting requirement which use qualifying construction contracts. These new requirements will apply in relation to each financial year of a company beginning on or after 1 April 2025.

The requirements relate to retention practices, policies and performance where retention clauses are included in a qualifying construction contract.

These include:

a statement on whether the payment practices and policies of the business include or do not include retention clauses
where a business makes a statement that retention clauses are included in their construction contracts, further information must be submitted

Changes from April 2025

Under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, the thresholds defining a medium-sized company are changing.

This change affects the thresholds for reporting payment practices, since this definition is used to determine which businesses are in scope of the regulations.

From 6 April 2025, the thresholds for reporting payment practices are:

£54 million annual turnover (up from £36 million)
£27 million balance sheet total (up from £18 million)
250 employees (unchanged)

Businesses that meet 2 or all 3 of these criteria will be in scope to report their payment practices.

The information must be published through an online service provided by the government and will be available to the public.

Supporting Guidance

The Department for Business and Trade (DBT) has updated its guidance to the Reporting on Payment Practices and Performance Regulations setting out how companies should report on new metrics on retentions. Companies using retentions will be required to include the following information in their payment reports every six months:

A series of statements covering the company’s policy on retentions, including when they are used, any standard terms, and the process for their release
The amount of retention withheld by the company from its suppliers, as a percentage of the amount withheld against it by its clients
The amount of retention withheld by the company from gross payments made to its suppliers, as a percentage of the gross amount paid to its suppliers.

The new metrics and they will apply to each financial year of a company beginning on or after 1 April 2025. This means that for companies with a financial year beginning on 1 January, their first reports containing the new metrics will be for the period 1 ‐ 30 June 2026 and need to be submitted by 30 July 2026.

The Fair Payment Code

The Fair Payment Code extends this with a voluntary committment. This replaces the Prompt Payment Code and is likely to for a mainstay of requirement for particularly Public Sector Contracts.

The Small Business Commissioner has announced the first companies to sign up to the new Fair Payment Code (FPC), which is on initial inspection, a bit thin on the ground with construction companies – John Sisk & Son, were an early signatory.

FIS encourages members wishing to apply to the FPC and complete the expression of interest form in order to receive an application form, and they will be awarded Gold, Silver or Bronze status depending on the time taken to pay invoices.

The importance of improving dispute resolution

by Clair Mooney | 4 Mar, 2025 | Contractual and Legal, Payments

The Conflict Avoidance Coalition is launching a campaign to raise awareness of conflict avoidance and better dispute management. Conflict Avoidance Week 2025 is all about driving a cultural shift – fostering collaboration, cooperation, and communication across the construction industry. By raising awareness and sharing best practices, the Coalition wants to create:

Stronger working relationships
Smoother project delivery
A more positive and productive work environment

Conflict Avoidance Week 2025 aims to highlight the importance of avoiding the time and expense associated with unnecessary disputes on construction and engineering projects. Instead, parties are encouraged to pursue resolution of issues through more collaborative efforts.

Conflict Avoidance Week will be officially launched on 24 March 2025 at an online event where delegates will hear from a range of industry professionals involved in conflict avoidance activities. You can register to join the launch event.

There will be an excellent line up of speakers, including FIS Chief Executive Iain McIlwee, our resident QS Len Bunton and Anthony Armitage from FIS member Thirdway to mention a few. They will be talking all things Pledge, highlighting upcoming activities, projects and plans, and showcasing real life conflict avoidance success stories.

The campaign encourages those associated with procurement and delivery of construction and engineering projects to commit to the Conflict Avoidance Pledge (www.capledge.org). Almost 600 organisations have signed the Pledge, indicating their commitment to maintaining business relationships and dealing with problems early and amicably. Businesses who have signed the Pledge have made this a keystone of their day-to-day commercial operations. Pledge signatories also commit to delivering value for money and working collaboratively to ensure projects are delivered on time, on budget and on par.

The Conflict Avoidance Coalition now comprises over 80 organisations, all associated with the procurement and delivery of construction and engineering projects. Participants include public and private sector clients, Tier 1 and Tier 2 contractors, trade organisations, and consultants.

The Week will be profiled via a range of events, maildrops, webinars and social media campaigns, all with a view to raising awareness.

Further information on Conflict Avoidance Week 2025, please contact the Coalition: CAPledge@rics.org