What is a payment notice in construction?

A payment notice is the notice a paying party gives to say what sum it considers due and how that sum was calculated. Under the Housing Grants, Construction and Regeneration Act 1996, as amended, it must be given within the time set by the contract.

What it has to say

It must state the sum the payer considers to be due and the basis on which that sum was calculated. A notice that gives a figure with no basis may not be valid.

When it is due

The contract sets a due date and a final date for payment. The payment notice is given a set number of days after the due date. Contracts that do not comply with the Act's payment rules are covered by the Scheme for Construction Contracts. Check your contract for the actual dates.

If the payer is late

If the payer does not give a payment notice on time, the contractor can send their own notice of the sum they consider due (sometimes called a payee's notice). Missing the deadline can have real consequences for the party who missed it, which is why every notice, with its date, belongs in your records.

Common questions

Who sends a payment notice?

Normally the paying party, in answer to an application for payment. A subcontractor can send their own if the payer fails to.

Is a payment notice the same as a pay less notice?

No. A payment notice says what the payer thinks is due. A pay less notice says the payer intends to pay less than that notified sum.

This page is general information for UK construction subcontractors and is not legal advice. Contracts differ, so check yours, and take advice on a specific dispute.