Freedom Isn’t Free UK Personal Finance
Self-Employed
Late Payment Interest UK: Your 8% + Base Rate Right
On overdue business-to-business invoices you can charge statutory interest of 8 percentage points above the Bank of England base rate, plus a fixed compensation sum per invoice (GBP 40, GBP 70 or GBP 100 by debt size). This is a legal right under the Late Payment of Commercial Debts (Interest) Act 1998, not a favour you ask for.
Late payment interest and fixed compensation (2026)
| What you can charge | Amount |
|---|---|
| Statutory interest (B2B invoices) | 8% plus the Bank of England base rate, per year, on the overdue amount |
| Base rate on 25 June 2026 | 3.75% (held by the Bank of England on 18 June 2026), so statutory interest is 11.75% a year - check the current base rate before you calculate |
| Fixed sum: debt under GBP 1,000 | GBP 40 per invoice |
| Fixed sum: debt GBP 1,000 to GBP 9,999.99 | GBP 70 per invoice |
| Fixed sum: debt GBP 10,000 or more | GBP 100 per invoice |
| Reasonable recovery costs | Claimable on top of the fixed sum if your actual costs are higher |
| When interest starts (agreed date) | The day after the agreed payment date |
| When interest starts (no agreed date) | 30 days after the later of the customer getting the invoice or you delivering the goods or service |
| Maximum payment terms | Usually 30 days for public authorities, 60 days for B2B unless a longer term is expressly agreed and not grossly unfair |
| Not the same as | HMRC interest on late tax you owe (base rate plus 4%, currently 7.75%) - a different rate on a different debt |