What the law requires
Under section 111 of the Housing Grants, Construction and Regeneration Act 1996, a payer who intends to pay less than the notified sum must give a notice stating the sum it considers due on the date of the notice and the basis on which that sum is calculated. The notice must be given no later than the prescribed period before the final date for payment: whatever the contract says or, under the Scheme, 7 days. See how the payment rules work.
A checklist for a valid notice
- Label it clearly as a pay less notice and refer to the contract and the payment cycle.
- State a sum. A notice that only lists deductions, without the sum considered due, risks being invalid.
- Show the basis of calculation: which items are valued lower and why, and any set-off (for example defects or liquidated damages), with enough detail for the payee to understand it.
- Serve it in time, counting days as the Construction Act requires (bank holidays don’t count). Our free payment deadline calculator on the payments guide works this out.
- Serve it the right way: to the address, person and by the method the contract’s notice clause requires. Keep proof.
- Serve it from the right person: the payer, or a person the contract allows to give notices on its behalf.
Common mistakes
- Serving the notice a day late, often by forgetting a bank holiday or the contract’s own notice rules.
- Treating a payment notice as a pay less notice without saying so. A single notice can sometimes do both jobs, but only if it clearly meets both sets of requirements and is served in time.
- Relying on an email when the contract requires post or hand delivery.
- Withholding for liquidated damages without the separate notices the contract requires for deducting them.
If the notice is invalid, the payer must usually pay the notified sum and then argue about value afterwards, as the Court of Appeal confirmed in S&T v Grove. Read our smash-and-grab adjudication explainer.
Example wording
Our free example notices and letters include a pay less notice you can adapt, alongside a payment notice and a notice of intention to suspend.
General information, not legal advice. What applies to you depends on your contract, the facts and where the work is, and the law changes. Check the sources below and take advice from a qualified professional before acting on anything that matters.
Last updated: 14 October 2026
