How much interest can you charge on a late invoice in the UK?

The headline answer: 8% above base rate, plus a fixed fee

For business-to-business invoices, UK law lets you charge statutory interest at 8% above the Bank of England base rate. With the base rate currently at 3.75%, that's 11.75% per annum, accruing daily from the day after the invoice's due date until it's paid. The right comes from the Late Payment of Commercial Debts (Interest) Act 1998 and applies automatically — no contract clause, no invoice small print, no advance warning required.

On top of the interest, the Act adds a fixed debt recovery sum per overdue invoice, and you can claim both together. More on that below.

The statutory interest formula for a late invoice

Statutory interest is simple (non-compounding) interest, calculated daily:

Worked through step by step for a £2,000 invoice that's 45 days overdue:

1. Annual interest: £2,000 × 11.75% = £235.00 per year
2. Daily interest: £235.00 ÷ 365 = £0.64 per day
3. Total at 45 days: 45 × the daily rate = £28.97

Not life-changing on its own — but it accrues every single day the client delays, and it sits on top of the fixed sum below. Together they comfortably cover the cost of chasing, which is exactly what Parliament intended.

The fixed debt recovery costs on top: £40, £70 or £100

Separately from interest, every overdue B2B invoice entitles you to a one-off fixed sum for debt recovery costs, banded by invoice value:

• Debt under £1,000 — £40
• Debt of £1,000 to £9,999.99 — £70
• Debt of £10,000 or more — £100

It's claimable the moment the invoice goes overdue, in full, regardless of how late payment ends up being — and it applies per invoice, so three late invoices from the same client means three fixed sums.

Ready-made figures for common invoice sizes

The table below shows statutory interest alone (the fixed sum comes on top) at the current rate of 11.75%. The figures move whenever the Bank of England changes the base rate, so for an invoice you're chasing right now, use the live calculator.

B2B only — consumer clients are different

The Act covers commercial debts only: both you and the client must be acting in the course of a business. Limited companies, sole traders, partnerships, and public bodies all count. Private individuals don't. If your client is a consumer, there's no statutory right — you can only charge interest if your contract includes a term allowing it, and courts will only enforce a reasonable rate. Excessive contractual rates risk being struck down as penalties.

Contractual interest vs statutory interest

If your B2B contract specifies its own late payment interest rate, that rate generally applies instead of the statutory rate — but only if it provides a "substantial remedy". A contract clause that sets interest at a token level (say, 1% a year) doesn't oust the Act; the statutory rate steps back in. In practice: if your contract is silent, you get 11.75%; if it names a meaningful rate, you get that rate.

When late payment interest starts accruing

Interest runs from the day after the due date:

• If your contract or invoice sets payment terms (7 days, 14 days, 30 days net), the clock starts the day after that period expires.
• If nothing was agreed, the Act's default applies: payment is due 30 days after delivery of the goods, performance of the services, or receipt of the invoice — whichever is latest — and interest starts the day after that.

A note on VAT

Statutory interest is calculated on the gross, VAT-inclusive amount of the unpaid invoice — the whole debt is overdue, including the VAT element. The interest you receive is itself outside the scope of VAT, so you don't charge VAT on it or issue a VAT invoice for it.

How to claim late payment interest from a client

The mechanics are simple: state the figures and keep them updated. Add a line to your chase emails — "this invoice is now accruing statutory interest at 11.75% per annum under the Late Payment of Commercial Debts (Interest) Act 1998, plus a £70 fixed debt recovery cost" — and show the running total on any statement or formal letter. The calculator gives you exact figures to paste in, and our chasing playbook covers when in the sequence to introduce them.

The honest friction is the upkeep: the total changes daily, every chase needs re-calculating, and most freelancers find invoking the law against their own client awkward. That's the part Hielda removes — it tracks every invoice's due date, calculates interest daily at the live rate, applies the correct fixed sum, and sends the escalating chases on your behalf, so the statutory charges are claimed consistently without you drafting a single email.

Bottom line

On any overdue B2B invoice you can charge 11.75% a year, counted daily, plus £40–£100 fixed — automatically, retrospectively up to six years, with no contract term needed. The amounts are modest per invoice, but the effect on behaviour isn't: clients who see the meter running pay first.