A business customer who pays you late owes you more than the face of the invoice. The law adds statutory interest - currently 11.75% a year - plus a fixed sum of £40, £70 or £100 per late payment, and you need no contract clause, no solicitor and no court to claim either. On a £2,400 invoice paid 60 days late, that comes to £116.20 on top of what you billed. It is one of the strongest rights a small firm holds, and one of the least used.
Two entitlements: interest at 11.75%, and a fixed sum on top
Under the late payment legislation, any business owed money by another business for goods or services can charge statutory interest at 8% plus the Bank of England base rate, as gov.uk’s guidance sets out. The base rate has been 3.75% since the Bank’s cut in December 2025, and was held there at the February, March and April meetings. That makes the statutory rate today 11.75%.
A debt turns late on the date you agreed, or, if you never agreed one, 30 days after the customer receives your invoice (or after you deliver the goods or service, if that’s later). Agreed terms have their own limit: usually no more than 60 days for business-to-business contracts, and 30 days for public authorities.
On top of the interest, the legislation sets a fixed compensation sum you can charge once per late payment:
- £40 for debts up to £999.99
- £70 for £1,000 to £9,999.99
- £100 for £10,000 or more
And if chasing the debt costs you more than that, gov.uk confirms a supplier can also claim reasonable costs each time they try to recover it.
One catch before you quote 11.75% at anyone: the statutory rate only applies where your contract doesn’t set its own interest rate for late payment. If your terms specify a different rate, that rate is the one you’ve got - so check what’s printed on the back of your quotes before you start.
On £2,400: 77p a day, plus £70 the moment it turns late
Take a £2,400 invoice from one business to another. The invoice value and the days late here are illustrative; every rate and the £70 are not.
The method comes straight from gov.uk’s guidance: work out a year’s interest, divide by 365, round the daily figure to the penny, then multiply by the days late. So £2,400 × 11.75% = £282 a year, and £282 ÷ 365 = 77p a day.
| Days overdue | Statutory interest | Fixed sum | Total you can add |
|---|---|---|---|
| 30 | £23.10 | £70 | £93.10 |
| 60 | £46.20 | £70 | £116.20 |
| 90 | £69.30 | £70 | £139.30 |
Notice where the money actually is. The interest is steady but slow - roughly 32p a day for every £1,000 owed. The £70 lands in full the day the debt turns late. On invoices this size the fixed sum outweighs the first two months of interest, which is rather the point: it compensates you for the hassle of chasing, not just the cost of the money.
To claim, you don’t amend the original invoice. gov.uk says to send a new one for the interest.
The rate is locked until 30 June, whatever the Bank does on 18 June
Here is the detail most explainers miss. The 2002 Order that sets the statutory rate doesn’t track the base rate day by day - it fixes the reference rate twice a year. The base rate in force on 31 December applies to debts turning late between 1 January and 30 June; the rate on 30 June covers the second half of the year.
The base rate on 31 December 2025 was 3.75%, so 11.75% is the statutory rate for any debt turning late up to 30 June 2026. The Bank’s next announcement, on 18 June, cannot change that before the 1 July reset. gov.uk’s plain-English guide simplifies all this to using the current base rate - and today both readings give the same 3.75%, so 11.75% is the number either way.
Charging interest is about to stop being optional
The Commercial Payments Bill, introduced to Parliament in May 2026, would turn this from a right into a rule. According to the government’s factsheet, interest at 8% over base would become mandatory on late commercial payments; maximum payment terms would be capped at 60 days with strictly limited exemptions; suppliers would gain a fixed sum where a customer raises a dispute late or without sufficient information; withholding retention payments under construction contracts would be prohibited; and the Small Business Commissioner would get powers to investigate poor payment practice, adjudicate disputes outside court and impose financial penalties.
The case for it is blunt. The factsheet puts the cost of late payment to the UK economy at £11 billion a year, with 38 businesses closing every day. Nothing applies retrospectively and there will be lead-in time, but the direction is set - firms that learn to charge now will simply be early.
Put the number in the reminder
Work the figure out and name it: “This invoice is now 60 days overdue. Under late payment legislation we’re entitled to add £46.20 in statutory interest plus £70 fixed compensation, and will invoice for both from Friday.” You can always waive it for a customer worth keeping - the entitlement is yours to use or not. But a specific number concentrates a finance department’s mind in a way a gentle reminder never has. The right has been on the books all along; the only thing missing is firms prepared to use it.
