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Late payment: how to claim interest and compensation

UK law lets businesses claim statutory interest and a fixed fee on late invoices. How it works, how to calculate it and how to ask for it.

For freelancers · 5 minute read · Updated 16 October 2026

If another business pays you late, you do not have to treat it as a favour. UK law gives you a right to interest and a fixed fee on late payments between businesses.

What you can claim

  • Statutory interest at 8% a year above the Bank of England Bank Rate.
  • A fixed fee for each late invoice: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more.

The fixed fee is on top of interest. Interest is simple, not compound, and runs from the day after the payment was due.

The calculation

Invoice amount × (8% + Bank Rate) × days overdue ÷ 365.

For a £2,800 invoice that is 14 days late, with a Bank Rate of 3.75%, the rate is 11.75% and the interest is £12.62. Add the £70 fixed fee and you can claim £82.62. The longer the invoice stays unpaid, the more it grows.

The Bank Rate used is the one in force on 30 June for debts that become due from 1 July to 31 December, and the one in force on 31 December for debts that become due from 1 January to 30 June. Check the current figure before you claim.

What it covers

The right applies to payments between businesses, including sole traders and limited companies. It does not apply to consumers. If your contract sets its own late payment terms, those terms must provide a substantial remedy to replace the statutory ones.

If no payment date was agreed, the default is 30 days after the invoice is delivered or the goods or services are provided.

How to ask for it

  1. Check the payment terms and the date the invoice was due.
  2. Send a polite reminder with the invoice number, the amount, the date it was due, the interest to date and the fixed fee.
  3. Say how much more accrues each day.
  4. Keep a record of every reminder and every reply.
  5. If it still is not paid, take advice about formal steps.

Many clients pay quickly once a reminder includes the figure. Even if you decide not to charge it, knowing what you are owed changes the conversation.

Making it routine

The easiest way to stop late payment piling up is to see it early. The Paylift app tracks every invoice by status, flags what is overdue and shows the interest you could claim.

General information, not legal advice. Check your contract and the current Bank Rate before you claim.

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