UK late-payment law explained
What your late-paying client legally owes you.
Every unpaid B2B invoice past its due date earns you 8% + Bank of England base rate in statutory interest, plus a fixed compensation fee of £40, £70 or £100depending on invoice size. Automatic under the Late Payment of Commercial Debts (Interest) Act 1998. You don’t need it in the contract. You don’t need to negotiate.
Current statutory rate
11.75%
8% statutory addition + 3.75% Bank of England base rate. The base rate moves — we track it and refresh this figure automatically after every Monetary Policy Committee meeting.
Fixed compensation fee
Plus £40, £70 or £100 the moment the invoice is late.
This is separate from the interest. Section 5A of the Act adds a fixed compensation fee, banded by the size of the original invoice, the moment the debt is late. It’s not per day, it’s not per chase — it’s one flat fee, automatic.
Invoice
Under £1,000
£40
A £680 invoice = £40 comp fee
Invoice
£1,000 – £9,999
£70
A £2,400 invoice = £70 comp fee
Invoice
£10,000+
£100
A £14,000 invoice = £100 comp fee
Worked example
A £2,000 invoice, 45 days overdue.
- Original invoice
- £2000.00
- Days overdue
- 45
- Statutory interest at 11.75%
- £28.97
- Compensation fee (§ 5A)
- £70.00
- Total you can invoice for
- £2098.97
Numbers computed live from the current statutory rate. Change any invoice amount / due date at the calculator.
B2B only.
The 1998 Act applies to invoices between businesses only. A homeowner paying you late for a bathroom refit is a consumer— different rules apply. The B2B test is whether both parties are “acting in the course of a business” at the time of the contract.
In Honest Invoices, each client is marked commercial or consumer at the point of add — statutory interest is only quoted on chase emails to commercial clients. Consumer chases use different language and don’t claim statutory rates.
Automate the chase
Every overdue invoice quotes the exact figure.
Honest Invoices tracks each unpaid invoice’s days-overdue live, accrues statutory interest at the current combined rate, and drops the legal figure into your chase emails automatically. £15/month locked. 14-day free trial, no card up front.