How To Write A Payment Application

A payment application is the notice you send on a construction contract setting out the sum you consider due for a period and how you calculated it. Under the Construction Act it can become the notified sum, which is the figure the payer has to pay in full unless they serve a valid pay less notice in time. Get the content and the timing right and the Act does the heavy lifting for you. Get them wrong and there’s no notified sum to enforce.

Why the wording carries so much weight

On a construction contract in scope of the Act, the sequence runs: payment due date, then a payment notice within 5 days, then a pay less notice if there’s going to be one, then the final date for payment.

Section 110A says the notice has to specify the sum considered due and the basis on which that sum is calculated. Section 111 then requires the payer to pay the notified sum in full by the final date unless a valid pay less notice was served.

If the payer was supposed to serve the payment notice and doesn’t, section 110B lets you serve yours instead, and your figure becomes the notified sum. That is the single most useful thing in the Act for a subcontractor. It only works if your application is properly put together.

An application that reads like an informal update, something along the lines of “we’re about £20k this month”, may not qualify as a notice at all. And there’s a cost to being slow: under s110B(3), where you serve in default of the payer, the final date for payment gets pushed back by however many days late your notice was. Being sharp about it is worth actual money.

Does the Act apply to you?

Section 106 excludes contracts with a residential occupier, meaning someone having work done on a home they live in or intend to live in. Domestic work sits outside this regime entirely, and there an “application” is just an invoice governed by your own terms.

Payment applications belong to subcontract and commercial construction work: main contractors, developers, commercial fit-out, public sector.

What goes in it

Start with who and what: your details, the payer’s, the contract or subcontract reference, and the site.

Then the application number and the period it covers. Number them sequentially, because that’s your audit trail when someone starts arguing about which application said what.

Put the key dates on it. The payment due date it relates to, and where you can work it out, the final date for payment. Stating the dates shows you’re operating the contract mechanism rather than just asking nicely for some money.

Then the sum you consider due. One clear figure. That’s the notified sum.

Then the basis of the calculation, which is the statutory requirement and the bit people skimp on. It wants to show the work done in the period, itemised or measured, the gross valuation to date, less what’s been previously certified or paid, variations and where they stand, materials on site if you’re claiming them, retention deducted, and the net sum you’re applying for.

The test to apply: could someone else rebuild your figure from what’s on the page? If not, the basis isn’t good enough.

Show retention separately, with the percentage and the amount held. Retention is easy to lose track of and very hard to recover if it was never itemised in the first place.

Attach the supporting records: measures, signed day-work sheets, variation instructions, delivery notes, photographs.

And get the VAT right for the contract. The domestic reverse charge applies to a lot of construction work between VAT-registered businesses, and getting that wrong hands them a technicality to bounce it on.

When to send it

Whatever your contract says. Read the dates out of it and put them in the diary.

Where the contract is silent, the Scheme for Construction Contracts applies: payment becomes due 7 days after completion of the work or when you make your claim, whichever is later, the final date is 17 days after that, the payment notice window is 5 days, and a pay less notice has to land not later than 7 days before the final date.

Being late with an application usually just rolls you into the next cycle. Being late with a default notice under s110B costs you directly, because the final date moves back by however many days you were late.

Worked example

Second fix subcontract, monthly applications, payment due date the 25th, final date 30 days later.

Application 03, period ending 25 August 2026:

Attached: measure sheet for the period, the VO-04 instruction, delivery notes for the materials on site.

The payer serves no payment notice within 5 days of the 25th. So you serve a default notice under s110B on 2 September, two days after their window shut, which moves the final date back two days. £26,529.50 is now the notified sum. Unless a valid pay less notice turns up at least 7 days before that adjusted final date, that’s what falls due in full.

Common mistakes

No basis of calculation. A number with no working behind it may not be a valid notice at all, which means no notified sum and nothing to enforce.

Firing it over as a casual email. Head it clearly as a payment application, number it, date it and reference the contract.

Waiting for the payer’s notice. If they don’t serve one, serve yours under s110B, and do it quickly, because every day late moves the final date.

Losing retention. If it isn’t itemised on every application it quietly stops being tracked, and then it’s gone.

Treating it as an invoice. They’re different instruments doing different jobs. Plenty of contracts want the application first, with the invoice following the certified sum.

Ignoring the reverse charge. Get the VAT treatment wrong and you’ve given them a free reason to reject the lot.

Do this in FieldHive

Nothing produces a compliant payment application in one click, but the pieces are here. Build the invoice that follows the application with the VAT handled properly, free in your browser. If the work is CIS and reverse charge, the CIS & VAT invoice generator covers both. Then track applications against payments across the whole job with the statement of account generator.

Aid, not advice

This guide explains what a payment application needs to contain and when to send it. It is not legal advice. Whether a particular notice is valid depends on your contract and the exact wording used. For a significant application or a contested valuation, take advice from a construction solicitor or a quantity surveyor.

*Legislation checked August 2026: Housing Grants, Construction and Regeneration Act 1996 (as amended); Scheme for Construction Contracts (England and Wales) Regulations 1998.*