Work out the statutory interest and fixed compensation you can claim when a business pays your invoice late, under the Late Payment of Commercial Debts (Interest) Act 1998.
Applies to business-to-business debts only, where your contract doesn't set its own substantial remedy for late payment. Simple (not compound) interest. This is a guide, not legal advice.
Interest rate. Statutory interest is 8% a year plus the Bank of England base rate. The base rate used is the "reference rate" in force on 31 December (for debts that become late between 1 January and 30 June) or on 30 June (for debts that become late between 1 July and 31 December). It stays fixed for that debt, even if the base rate changes later.
Interest. Simple interest: debt × rate × days late ÷ 365. It starts the day after the payment was due.
When is it late? On the day after the agreed due date. If you didn't agree one, the payment is late 30 days after the customer receives the invoice or you deliver the goods or service, whichever is later.
| Amount of debt | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
You can only charge the fixed sum once per payment. You can't claim statutory interest if your contract sets a different interest rate (a substantial contractual remedy). This applies to business-to-business transactions only. Sources: GOV.UK late commercial payments guidance; The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002; Bank of England Bank Rate history (rates checked 20 Oct 2026). This is general guidance, not legal advice.
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