Late payment · 15 September 2026
Statutory interest on late invoices: the July–December 2026 rate
If a business customer pays your invoice late, UK law gives you more than the invoice amount. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can add statutory interest and a fixed compensation fee to every qualifying overdue invoice — no contract clause required.
How the rate is set
Statutory interest is 8% plus the Bank of England base rate — but not the base rate on any given day. The law fixes a reference rate twice a year:
- The base rate on 31 December applies to debts falling due from 1 January to 30 June
- The base rate on 30 June applies to debts falling due from 1 July to 31 December
For the current period, that works out at 11.75% a year (8% plus a 3.75% base rate at the June reference date). Always sanity-check the current base rate at bankofengland.co.uk before sending a formal demand — our late payment calculator is kept in line with the current reference period.
What that means in pounds
Take a £4,200 invoice that's 90 days overdue:
- Interest: £4,200 × 11.75% ÷ 365 × 90 days = £121.68, and it keeps accruing at about £1.35 a day
- Fixed compensation: £70 (see bands below)
- Total you can demand: £4,391.68 — and rising daily
The fixed compensation bands
On top of interest, you can charge a fixed sum for each qualifying invoice, based on its size:
| Invoice amount | Compensation |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Chasing ten late invoices of £500 each? That's £400 of compensation before interest even starts.
Who can claim
Any business supplying goods or services to another business — including sole traders and freelancers — where the contract doesn't already provide a "substantial remedy" for late payment. Interest runs from the day after the agreed payment date, or 30 days after invoice/delivery where no date was agreed. You can go back up to six years (five in Scotland), even on invoices that were eventually paid late.
Why bother claiming it
Two reasons. First, adding interest and compensation to a formal demand changes debtor behaviour — it signals you know your rights and the bill grows every week they stall. Second, it can offset the cost of recovery entirely: on mid-sized debts, the statutory add-ons often cover a collection agency's commission.
Work out your own figure with the free late payment calculator, and if the demand gets ignored, compare agencies that collect debts like yours.
This is general information, not legal advice.