Pay Less Notice UK 2026 (JCT and NEC4)

A formal written notice from a UK main contractor to a subcontractor stating that the contractor intends to pay less than the amount in the subcontractor's Application for Payment. Required by sections 110A and 111 of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act). Must specify the sum the contractor considers due and the basis for the calculation.

Strict timing under the Construction Act: at least the prescribed period before the final date for payment. The prescribed period is set by the contract (typically 1-5 days). Common project values: JCT 2024 SBC = 5 days before final date; NEC4 ECC = 7 days before final date (project-specific). If the Pay Less Notice arrives later than the prescribed period, it is invalid and the original AfP value becomes payable in full.

Under section 111 of the Construction Act: (a) the sum the paying party considers to be due to the payee at the date the notice is given, and (b) the basis on which that sum is calculated. The basis must be specific enough that the subcontractor can understand the deductions (e.g. line-by-line variations rejected, contra-charges itemised, defects valued). A bare statement of a reduced number without basis is invalid.

The original Application for Payment becomes the 'notified sum' under section 111 of the Construction Act and is payable in full by the final date for payment. If the main contractor refuses to pay the full amount, the subcontractor can refer the dispute to adjudication under section 108 of the Construction Act. Adjudicators consistently uphold this rule: a late or invalid Pay Less Notice = full AfP payable. Decision is enforceable within 28 days.

The provider funds the certified or notified sum, not the original AfP value. If you drew 70% on a £100k AfP but a valid Pay Less Notice reduces the certified amount to £80k, the provider keeps £56k (70% of £80k) and you owe £14k back from the reduced certified payment. Most facilities maintain a buffer reserve to absorb Pay Less notices. Repeated significant deductions can trigger facility review or higher haircuts.

Yes. Two main routes: (1) refer the dispute to adjudication under section 108 of the Construction Act for a decision within 28 days (binding pending final settlement), (2) issue a Notice of Dissatisfaction under NEC4 contracts within 4 weeks (formal record of dispute, preserves your position for later arbitration). Adjudication is the standard route. Costs typically £3,000-£10,000 in adjudicator fees plus your own time/legal cost; recoverable on win in some cases.