Atlas Claims InsightsPublished 7 October 2026 · Reviewed 14 October 2026 · 5 min readKey takeaways
- UK businesses can usually add statutory interest at 8% above the Bank of England reference rate to late B2B invoices.
- Fixed compensation of £40, £70 or £100 per invoice applies, depending on the debt size.
- The Act does not apply if the contract already provides a substantial remedy for late payment, or to consumers.
- Stating the full statutory claim in a reminder often prompts payment of the principal.
If another business pays you late, you may be entitled to more than the invoice amount. The Late Payment of Commercial Debts (Interest) Act 1998 gives suppliers a statutory right to interest and fixed compensation on overdue business-to-business debts, unless the contract provides its own substantial remedy for late payment.
When the Act applies
- The contract is for the supply of goods or services.
- Both parties are acting in the course of business; consumers are not covered.
- The contract does not already set out a substantial remedy for late payment.
When is a payment late?
If a payment date was agreed, payment is late after that date. If none was agreed, the default is 30 days after the later of delivery or receipt of the invoice. Agreed payment terms between businesses are generally limited to 60 days, unless a longer period is expressly agreed and is not grossly unfair to the supplier.
What you can claim
| Item | What the Act provides |
|---|---|
| Statutory interest | 8% per year above the Bank of England reference rate (the base rate in force on 30 June or 31 December, applied for the following six months) |
| Fixed compensation, debt under £1,000 | £40 |
| Fixed compensation, £1,000 to £9,999.99 | £70 |
| Fixed compensation, £10,000 or more | £100 |
| Further recovery costs | Reasonable recovery costs above the fixed sum may also be claimed in some cases |
Interest is simple, not compound, and runs daily from the day after payment was due. Multiply the debt by the annual rate and divide by 365 to find the daily amount.
Using it in practice
- Put payment terms in writing on both the contract and the invoice.
- When payment is late, send a clear reminder stating the statutory interest and compensation that apply.
- Keep a record of every reminder and reply.
- Use the full statutory claim as leverage. Many debtors settle the principal promptly once they see what interest and compensation add.
International debts
The Act applies to contracts governed by the law of a part of the UK. For overseas customers, the governing law of the contract and local rules decide what interest can be claimed. Many other jurisdictions, including EU member states, have their own late-payment rules.
Quick answers
What interest rate can I charge on a late B2B invoice in the UK?
Under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest is 8% per year above the Bank of England reference rate, unless the contract provides a substantial remedy of its own.
Can I charge a late payment fee as well as interest?
Yes. The Act also gives fixed compensation of £40, £70 or £100 per debt depending on its size, and reasonable further recovery costs in some cases.
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This guide is general information about the law of England and Wales as at October 2026. It is not legal advice and may not cover your situation. Atlas Claims is not a law firm; for advice on your legal rights or on litigation, consult a qualified solicitor.
