How to charge interest on a late invoice in the UK, step by step
By SendPay Business · · 2 min read
If another business pays you late, UK law lets you add interest and a fixed sum for the cost of chasing it, even if your invoice never mentioned it. Most small businesses never claim it. Here is what you can charge, how to work it out, and how to ask.
What the law allows
The Late Payment of Commercial Debts (Interest) Act 1998 covers invoices from one business to another. Unless your contract agreed something different, you can claim statutory interest of 8% a year plus the Bank of England base rate, from the day after the invoice was due.
On top of interest you can claim a fixed sum per invoice for the cost of recovering it: £40 if the debt is under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more.
When it does not apply
It does not cover sales to individual consumers. If your contract sets its own late payment terms, those generally apply instead. This guide explains the rules; it is not legal advice for your case.
Working it out
Interest per day is the debt × (8% + base rate) ÷ 365. Multiply by the number of days late. On a £2,500 invoice 30 days late at a combined rate of 12%, that is about £0.82 a day, or £24.66, plus £70 fixed compensation.
Use the base rate that applied on 30 June or 31 December just before the invoice fell due.
Asking for it
Send a short, factual message.
- Name the invoice, the amount and the date it was due.
- Say you are claiming statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
- Give the interest so far, the daily rate and the fixed sum.
- Give a clear way to pay today, such as a card payment link.
Getting paid on time next time
State your payment terms on every invoice, and include a way to pay by card. People pay faster when they can pay the moment they open the invoice.
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Build my platform →Questions people ask
Do I need to have put late payment terms on my invoice?
No. Statutory interest applies to business-to-business invoices by law unless your contract agreed different terms.
Can I charge a consumer late payment interest?
Not under this Act, which covers business-to-business debts only.
Is there a calculator?
Yes. The free late payment interest calculator works out the interest and the fixed compensation for you.
Open the calculator →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.