For late invoices to business customers, UK law lets you claim interest at 8% above the Bank of England base rate, plus fixed compensation of £40, £70 or £100.
The calculation
- Annual rate = 8% + the Bank of England base rate.
- Daily interest = invoice amount × annual rate ÷ 365.
- Interest = daily interest × days late.
- Add the fixed compensation for the invoice size.
Fixed compensation
| Invoice amount | Compensation |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Worked example
A £2,500 invoice paid 34 days late, with a base rate of 4% (check the current rate): 12% × £2,500 ÷ 365 × 34 = £27.95 interest, plus £70 compensation.
Statutory interest only applies to business-to-business debts, not to invoices to private individuals.
FAQs
What is the late payment interest rate in the UK?
8% above the Bank of England base rate, for business-to-business invoices.
Can I charge late fees to consumers?
Statutory late payment interest doesn't apply to private individuals; it's for business customers.
How much compensation can I add?
£40 for debts under £1,000, £70 from £1,000 to under £10,000, and £100 for £10,000 or more.
Plan it in minutes
The Invoice Tracker works out interest and compensation on every overdue business invoice automatically, and the kit adds a final-notice email template.
