What can we claim from a customer who paid late?
Work out the statutory interest and the fixed compensation you can add when another business pays you late, from the amount, the due date and the date it was paid.
When another business or a public authority pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 lets you add statutory interest and a fixed sum to what they owe, unless your contract sets its own late-payment interest.
The interest is 8% a year plus the Bank of England base rate, charged on the amount paid late for each day it is late. The base rate is fixed for the whole debt: the rate on 30 June if the payment became late between 1 July and 31 December, or on the 31 December before if it became late between 1 January and 30 June. The fixed sum is £40, £70 or £100, depending on the size of the debt. If your reasonable costs of recovering the debt are higher than that, you can claim those instead.
Results
- Interest a day
- £2.70
- Interest for 90 days
- £243.37
- Fixed sum
- £70.00
| Days late | Interest | You can claim |
|---|---|---|
| 30 | £81.12 | £151.12 |
| 60 | £162.25 | £232.25 |
| 90 | £243.37 | £313.37 |
| 180 | £486.74 | £556.74 |
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Worked example: An £8,400 invoice paid 90 days late
A made-up example: payment was due on 31 March 2026 and arrived on 29 June 2026. Interest started on 1 April 2026, so it uses the base rate on 31 December 2025, which was 3.75%. No recovery costs beyond the fixed sum.
- Days late: 31 March 2026 to 29 June 2026
- 90
- Interest rate: 8% plus the base rate on 31 December 2025 (3.75%)
- 11.75% a year
- Interest a day: £8,400 × 11.75% ÷ 365
- £2.70
- Interest for 90 days
- £243.37
- Fixed sum for a debt of £8,400
- £70.00
- You can claim
- £313.37
- Total now owed
- £8,713.37
Paid 180 days late instead, the claim would be £556.74: the interest keeps growing each day at the same rate, while the fixed sum stays at £70.
Worth knowing
- If you did not agree a payment date, a payment is late 30 days after the customer gets the invoice or you deliver the goods or service, whichever is later.
- The interest is simple interest: it is charged on the amount paid late, not on interest already added.
- You can charge the fixed sum once for each payment that is late. Your reasonable recovery costs replace it only where they are higher.
- You cannot claim the statutory rate if your contract sets a different rate of interest for late payment.
- The Commercial Payments Bill would change the rules on payment terms and late-payment interest. It was still going through the House of Lords, and not yet law, when this page was checked.
Routes this works for
Sources
- GOV.UK: Late commercial payments: charging interest and debt recovery · checked 9 October 2026
- GOV.UK: Charging interest on commercial debt (worked out per day over 365 days) · checked 9 October 2026
- GOV.UK: Claim debt recovery costs · checked 9 October 2026
- legislation.gov.uk: Late Payment of Commercial Debts (Interest) Act 1998, s1 (simple interest), s4 (when interest runs) and s5A (fixed sums and recovery costs) · checked 9 October 2026
- legislation.gov.uk: Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (8% over the base rate on 30 June or 31 December) · checked 9 October 2026
- Bank of England: Official Bank Rate history · checked 9 October 2026
- UK Parliament: Commercial Payments Bill [HL], bill stages · checked 9 October 2026
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