Statutory interest and fixed compensation
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Try free for 30 daysHow to claim late payment interest in the UK
When another business pays a qualifying invoice late, UK law may let you claim statutory interest and a fixed compensation amount. Start by checking that the debt arose from a business-to-business supply and that your contract does not already set a different late-payment rate.
Interest normally runs from the day after payment was due until the day the money arrives. The statutory rate is 8 percentage points above the Bank of England base rate. If the base rate changes while an invoice is overdue, each period should use the rate that applied at the time. The fixed compensation is £40, £70 or £100, depending on the value of the debt.
Write to the client with the invoice number, due date, overdue amount, interest and compensation claimed, then give a clear date for payment. Keep the tone factual. Attach the original invoice and keep copies of your agreement, delivery evidence and correspondence.
If the client disputes the invoice, pause before escalating and resolve the underlying disagreement first. For a material debt or a complex contract, consider advice from a solicitor. You can read more about how VigilPay applies these rules in our methodology.
3 worked examples
Illustrative UK-law invoices after 45 days late, using the rate history held by VigilPay.
| Invoice | Interest | Compensation | Late payment charge |
|---|---|---|---|
| £450.00 | £6.66 | £40.00 | £46.66 |
| £2,800.00 | £41.42 | £70.00 | £111.42 |
| £12,000.00 | £177.53 | £100.00 | £277.53 |
Frequently asked questions
When can I claim statutory interest?
You may be able to claim statutory interest when another business or public authority pays a qualifying commercial debt late and your contract does not set a different interest rate.
What if the client refuses to pay the interest?
Start by sending a clear written request that states the invoice, overdue period, interest and fixed compensation claimed. If the client disputes the charge, consider taking legal advice before escalating.
Can I claim if the contract isn't in GBP?
Potentially, if UK law governs the contract. Statutory interest is calculated in the invoice currency, while the fixed compensation is set in GBP and may be converted approximately for convenience.
Do I need a written contract?
Not always, but written terms, an accepted quote, the invoice and evidence that the work was supplied can make the payment obligation and due date much clearer.
What about consumers vs businesses?
The Late Payment of Commercial Debts (Interest) Act 1998 applies to qualifying business-to-business and public-sector debts, not ordinary consumer transactions.
How do I calculate interest if the base rate changed during the overdue period?
VigilPay handles this automatically. Enter your figures above for a live calculation.
When you can't claim
- The client is a consumer rather than a business or public authority.
- The debt did not arise from a business-to-business transaction.
- The invoice is genuinely disputed and the underlying issue has not been resolved.
This calculator provides a general estimate, not legal advice. Seek advice from a solicitor if the amount is material or the situation is complex.