UK Late Payment Interest: How to Claim on Overdue Business Invoices
Statutory interest at 8% over base rate, the fixed compensation bands, and how to claim on a late B2B invoice.
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If a UK business customer pays late, you have a statutory right to claim interest and a fixed sum. Here is how it works.
What you can claim
Under the Late Payment of Commercial Debts (Interest) Act 1998:
- Interest at 8% above the Bank of England base rate, as simple interest
- Fixed compensation per invoice: £40 if the debt is under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more
- Reasonable recovery costs beyond the fixed sum in some cases
It applies to business-to-business and public sector contracts, not consumers. Your contract may set a different rate, but it must provide a substantial remedy.
Worked example
A £5,000 invoice is 30 days overdue. If the base rate is 4%, statutory interest is 12%: £5,000 × 12% × 30 ÷ 365 = about £49.32, plus £70 fixed compensation. Try your own numbers in the UK late payment interest calculator.
How to claim
- State your payment terms on every invoice
- Send a polite reminder before the due date
- After the due date, send a formal demand citing the Act, the interest and the fixed sum
- Escalate to a letter before action, then the small claims process if needed
Avoiding late payment
- Invoice on delivery
- Send customer statements (use the statement of account generator)
- Track receivables weekly and measure DSO
Tools
Pyalm Books tracks receivables and customer statements. It is UAE-first today, and we add features for the UK as customers join. Try it free during beta.
This is general information, not legal advice. Check gov.uk or take legal advice for your situation.