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If another business pays you late, the law lets you charge interest on the debt and claim a fixed sum towards your costs of chasing it. You do not need it written into your contract, though your contract can set its own terms. Here is how the amounts are worked out.
Statutory interest is 8% a year plus the Bank of England base rate. For debts that fall due between 1 July and 31 December 2026, the base rate that counts is the one on 30 June 2026, 3.75%, so the rate is 11.75% a year.
Working out the interest
Interest = invoice amount × 11.75% ÷ 365 × days late.
On a £5,000 invoice that is £1.61 a day. Paid 45 days late, that is £72.43 of interest.
| Invoice | 30 days late | 60 days late | 90 days late |
|---|---|---|---|
| £800 | £7.73 | £15.45 | £23.18 |
| £2,500 | £24.14 | £48.29 | £72.43 |
| £5,000 | £48.29 | £96.58 | £144.86 |
| £12,000 | £115.89 | £231.78 | £347.67 |
| £25,000 | £241.44 | £482.88 | £724.32 |
The base rate that applies is fixed for each half year: the rate on 31 December for debts due from January to June, and the rate on 30 June for debts due from July to December. A change in Bank Rate part way through does not change the rate on a debt already in that period.
The fixed sum for recovery costs
On top of interest, you can claim a fixed amount for each late invoice.
| Size of the debt | Fixed sum |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
So the £5,000 invoice paid 45 days late gives £72.43 of interest plus £70, a total claim of £142.43.
Things to know before you claim
- It applies between businesses, not to sales to consumers.
- The clock starts from the payment date you agreed. Agreeing clear payment terms on every invoice makes the date easy to show.
- Send the customer a revised invoice or a letter showing the interest and the fixed sum, and keep a record of what you sent.
- Charging interest can affect a working relationship, so many businesses use it with persistent late payers rather than one-off delays.
Work out your claim
The late payment interest calculator works out the daily interest, the total and the fixed sum from the invoice amount and the days late. If late payments are squeezing your cash, the cash runway calculator shows how many months your money will last.
Sources: gov.uk, Charging interest on a commercial debt and Claim debt recovery costs; Office of the Small Business Commissioner, interest calculator guidance; Bank of England, June 2026 decision. Checked 1 November 2026.
This is general information, not financial or tax advice.
It explains published rules and figures. Your own position depends on your full circumstances,
so speak to a qualified adviser before acting on it.