Late payment fees in the UK: what you can charge a business client
If another business pays your invoice late, UK law lets you add two things without any clause in your contract: statutory interest, and a fixed recovery sum of GBP 40, 70 or 100 per invoice. Type in the invoice amount below to see the fixed sum and what each day of delay adds.
The two charges
- Statutory interest. 8% a year on top of the Bank of England base rate, charged on the unpaid amount from the day after the payment was due. It is simple interest, not compounded.
- A fixed recovery sum, once per late invoice. It depends only on the size of the invoice, not on how late it is.
| Invoice amount | Fixed sum |
|---|---|
| Under GBP 1,000 | GBP 40 |
| GBP 1,000 to GBP 9,999.99 | GBP 70 |
| GBP 10,000 or more | GBP 100 |
What interest comes to: worked examples
These figures use a base rate of 3.75%, so the interest rate is 11.75% a year. Interest is amount x 11.75% x days late / 365, rounded to the penny. Change the base rate in the lookup above to see your own.
| Invoice | Fixed sum | Per day | 30 days late | 90 days late |
|---|---|---|---|---|
| GBP 500 | GBP 40 | GBP 0.16 | GBP 4.83 | GBP 14.49 |
| GBP 2,500 | GBP 70 | GBP 0.80 | GBP 24.14 | GBP 72.43 |
| GBP 10,000 | GBP 100 | GBP 3.22 | GBP 96.58 | GBP 289.73 |
| GBP 25,000 | GBP 100 | GBP 8.05 | GBP 241.44 | GBP 724.32 |
The point for a small invoice: the interest on a GBP 500 invoice is pocket change for a month, while the fixed GBP 40 is the larger part of what you can add. Many freelancers ask for neither because they do not know the figures. Quoting the exact sum in a reminder shows you know the rules.
When this does not apply
- It covers business-to-business and public-sector debts only. It does not cover consumers.
- If your contract sets its own late-payment terms that are a "substantial remedy", those can replace the statutory ones.
- The base rate used depends on the date the debt fell due, and the Bank of England changes it several times a year. Use the rate you have confirmed. Official wording: gov.uk guidance on charging interest.
- This page is information, not legal advice. For a large sum, speak to a solicitor or a debt-recovery adviser.
Next steps
- Work out exact days and the total for one invoice with the late payment interest calculator, which also writes the reminder.
- Set the wording up front with the payment terms generator.
- Escalate with the letter before action.
- Keep track of every unpaid invoice and who to chase today in Chasebook, free for 5 open invoices.