Late Payment Guide for Trades

Late Payment of Commercial Debts Act 1998

This Act gives you the automatic right to charge interest on late business-to-business invoices. It applies even if your contract doesn't mention it. Consumer (B2C) work is covered under different rules.

Source: Late Payment of Commercial Debts (Interest) Act 1998

30-day default payment terms if nothing agreed in writing

If you haven't agreed payment terms in writing, the default is 30 days from the invoice date (or delivery of goods/services, whichever is later). Always confirm terms in your quote.

Source: gov.uk: Charge interest and claim debt recovery costs if a payment is late

Statutory interest: 8 percentage points above the Bank of England base rate

From the day after payment was due, you can charge 8 percentage points above the Bank of England's base rate (the rate set on the preceding 31 December applies for interest starting Jan–Jun, and the rate set on the preceding 30 June applies for Jul–Dec). At the Bank Rate of 3.75% (held 30 July 2026), that's 11.75% a year, or roughly £0.64/day on a £2,000 invoice. Check the current Bank Rate before you calculate, since it moves.

Sources: The Late Payment of Commercial Debts (Rate of Interest) (No.3) Order 2002, Article 4 (rate = 8% above Bank of England base rate), Bank of England: Interest rates and Bank Rate, our latest decision

Fixed late payment compensation amounts

On top of interest, you can claim fixed compensation: £40 for invoices up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000+. You don't need to go to court to claim these.

Source: gov.uk: Claim debt recovery costs on late commercial payments (fixed compensation bands)

Reminder invoice at 7 days overdue

Send a friendly reminder with the original invoice attached: "This invoice is now 7 days overdue. Please arrange payment at your earliest convenience." Keep a record of the date sent.