UK Statutory Interest on Late Payments

If a UK business pays you late, you may be entitled to charge interest on top of the invoice. This isn't a service you buy. It's a statutory right under the Late Payment of Commercial Debts (Interest) Act 1998.

This article is a plain-language summary, not legal advice. Check GOV.UK or a solicitor before relying on it for a specific dispute.

What you can charge

• Statutory interest: 8% plus the Bank of England base rate, calculated on the overdue amount. The base rate changes, so the exact figure moves with it. On £1,000 with a 0.5% base rate, that's £85 a year.
• A fixed recovery fee: a flat sum for the cost of chasing, on top of the interest. It's £40 for debts under £1,000, £70 for debts from £1,000 to £10,000, and £100 for debts of £10,000 or more.

Both apply to business-to-business debts. They don't apply to consumers.

When it starts

Interest runs from the day after the payment becomes late. What "late" means depends on the contract: if you agreed 30-day terms, interest starts on day 31. If the contract is silent, the law sets a default period (30 days for most business payments).

The catch

You have to actually claim it. Most freelancers never do, either because they don't know they can or because asking feels like escalation. But stating it plainly, at the right stage of a reminder sequence, is often what finally gets a late payer to act. See the follow-up templates for where statutory interest fits in the sequence.

What's changing

A new Commercial Payments Bill is working through Parliament. It would make statutory interest mandatory in many B2B contracts and stop parties from agreeing it away. Worth watching if you invoice UK businesses regularly, but the 8%-plus-base-rate figure has been the standard for years.

Charge what you're owed, without the awkwardness

DueBuddy can add statutory interest to the later stages of your reminder sequence automatically, so it's stated plainly and on schedule rather than in an angry final email.

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