Late payment interest in the United Kingdom
An invoice paid late in the United Kingdom carries statutory interest at 11.75 % a year — the reference rate plus 8 points. A fixed sum of £100 towards recovery costs is owed on top, per late invoice.
A worked example
£10,000 paid 45 days late accrues £144.86 in interest, plus the £100 fixed sum.
Maximum payment terms
Between businesses : No statutory limit · Public authorities : No statutory limit
The United Kingdom kept the architecture it had as a member state. Under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest runs at the Bank of England base rate plus eight percentage points, and a creditor may also claim a fixed sum towards recovery costs — scaled by the size of the debt rather than set at one amount.
The fixed sum rises with the debt
Where the Union settled on a single EUR 40, the UK legislated three bands: GBP 40 on a debt below GBP 1,000, GBP 70 from GBP 1,000 to just under GBP 10,000, and GBP 100 at GBP 10,000 or more. The sum is claimable once per late payment, not once per relationship, so a run of overdue invoices produces a run of fixed sums.
It is a floor, not a ceiling. Where the reasonable costs of recovering the debt exceed the fixed sum — a collection agency, a solicitor — the difference can be claimed on top. That right is often left unused, because the fixed sum reads like a settlement rather than the opening figure it is.
The rate is fixed for six months, and it is not the rate on the day
The base rate used is the one in force on 31 December for debts becoming late between 1 January and 30 June, and the one in force on 30 June for the second half of the year. A debt that falls due in May and is paid in November therefore straddles two periods and accrues at two different rates, in sequence.
That six-month freeze also means the Bank moving its base rate mid-period does not change what is owed on an existing late debt. Reading today's base rate off a news headline and adding eight is the usual way to get the figure wrong.
Worth knowing
The United Kingdom kept the same architecture after leaving the Union but scales the fixed sum by debt size instead of setting one amount: GBP 40 below GBP 1,000, GBP 70 up to GBP 10,000, GBP 100 above it — claimable once per late payment, with reasonable further recovery costs on top.
FAQ
- Does statutory interest apply if the contract says nothing about interest?
- Yes — that is precisely when it applies. The Act implies a term into commercial contracts where none was agreed. A contract can displace it only by providing a substantial contractual remedy for late payment; a clause that simply excludes interest, or offers a token rate, is void and the statutory rate applies instead.
- Can I claim interest on an invoice already paid in full?
- Yes. Payment of the principal does not extinguish interest that had already accrued, and the fixed sum is owed for the period the debt was late. In practice most suppliers write it off to protect the relationship — which is a commercial decision, not a legal necessity, and worth making deliberately.
Important
A general overview, not legal advice. The reference rate is reset twice a year and the figure above was read on 2026-09-03 — check the period your invoice actually falls in before quoting a number to a debtor.