The short answer: if your customer is a business (a builder you subbed for, a letting agent, a shop), you can add statutory interest at 8% plus Bank Rate, which is 11.75% a year for invoices that went overdue in 2026, plus a fixed £40, £70 or £100 per invoice depending on its size. If your customer is a homeowner, you can only add interest or fees they agreed to in your quote or terms, but a county court claim can usually add 8% a year. Either way: chase early, calmly, in writing, with a date to pay by.
Jump to: Calculator · The rules · Rate table · Four messages to copy · Homeowners · If they still won't pay · Next time · FAQ
Late payment interest calculator
Everything stays in your browser. Nothing you type is sent anywhere.
Use the Bank Rate box only if your debt went overdue before 2023 or after 31 December 2026, or to check another figure. If your contract sets its own interest rate, use that instead: the statutory rate doesn't apply.
What the law lets you claim from a business customer
The Late Payment of Commercial Debts (Interest) Act 1998 applies across the UK when one business sells goods or services to another. Sole traders count as businesses on both sides. In plain terms:
| What | The rule |
|---|---|
| When it's late | The day after the agreed payment date. If you never agreed one, it's late 30 days after the customer got the invoice or you finished the work, whichever is later. |
| Interest rate | 8% a year plus the Bank of England base rate (Bank Rate). The Bank Rate used is fixed for six months: the rate on 30 June for debts that go overdue from 1 July to 31 December, and on 31 December for 1 January to 30 June. It doesn't change while the debt is outstanding. |
| How it's worked out | Simple interest by the day: amount × rate ÷ 365 = daily interest, × the number of days late. gov.uk's example: £1,000 at 8.5% is about 23p a day, so about £11.50 after 50 days. |
| Fixed compensation | £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, £100 for £10,000 or more. Once per invoice, on top of interest. You can also claim reasonable recovery costs above that. |
| If your contract sets a rate | You can't claim the statutory rate as well. Your contract rate applies (it has to be a fair remedy, so a token 1% may not stop the statutory rate). |
| How to claim it | gov.uk says to send a new invoice if you decide to add interest. Many trades put it in the final reminder first, as below. |
The Commercial Payments Bill, which would cap payment terms at 60 days and stop contracts from removing statutory interest, was at second reading in the House of Commons on 26 October 2026. It isn't law yet, and the government says the new limits won't start before 2027. The rules above still apply.
Statutory interest rates by date
Find the half-year in which the invoice went overdue. That rate applies for the whole time it stays unpaid.
| Invoice went overdue | Bank Rate on the reference day | Statutory interest |
|---|---|---|
| 1 Jul – 31 Dec 2026 | 3.75% (30 June 2026) | 11.75% |
| 1 Jan – 30 Jun 2026 | 3.75% (31 December 2025) | 11.75% |
| 1 Jul – 31 Dec 2025 | 4.25% (30 June 2025) | 12.25% |
| 1 Jan – 30 Jun 2025 | 4.75% (31 December 2024) | 12.75% |
| 1 Jul – 31 Dec 2024 | 5.25% (30 June 2024) | 13.25% |
| 1 Jan – 30 Jun 2024 | 5.25% (31 December 2023) | 13.25% |
| 1 Jul – 31 Dec 2023 | 5.00% (30 June 2023) | 13.00% |
| 1 Jan – 30 Jun 2023 | 3.50% (31 December 2022) | 11.50% |
From the Bank of England's Bank Rate history. For invoices that go overdue from 1 January 2027, the rate depends on Bank Rate on 31 December 2026 (it was 3.75% on 26 October 2026, with the next decision on 5 November).
A worked example. You fitted a kitchen for a letting agency. The £2,400 invoice was due on 15 September 2026 and it's now 26 October: 41 days late. Interest: £2,400 × 11.75% ÷ 365 = £0.7726 a day (about 77p), × 41 = £31.68. Compensation: £70. Total now due: £2,501.68, and 77p more each day.
Four messages to copy, firmer each time
Every message says the invoice number, the amount, what it was for, how to pay, and a date to pay by. Send by email (so there's a record) and text a short version. Phone after the second one: calls get paid faster than emails.
1. Friendly reminder (1–3 days late)
Hi [name], just a quick reminder that invoice [number] for [job] ([£ amount]) was due on [date]. I've attached it again. Bank details: [sort code, account, reference]. If you've already paid, thank you, and please ignore this.
2. Firm reminder (7–14 days late)
Hi [name], invoice [number] for [job] ([£ amount]) is now [N] days overdue. Please pay it by [date, 7 days from today]. If there's a problem with the invoice or the work, let me know today so we can sort it out.
3. Final reminder (21–30 days late)
Dear [name], I've written about invoice [number] ([£ amount], due [date]) on [date of reminder 1] and [date of reminder 2] and haven't received payment or a reply. [Business customers: paste the text from the calculator here.] Please pay [£ total] by [date, 7 days from today]. If it isn't paid by then, I'll send a formal letter before claim and may start a court claim without further notice. [Your name, business name, phone]
Only say what you're prepared to do. If you'd rather keep the customer, swap the last line for an offer: "If paying in one go is difficult, call me and we can agree instalments in writing."
4. Letter before claim (30–45 days late)
A formal letter, sent by post (signed-for) and email, giving a final deadline. It should say: who you are, the invoice details and work done, the amount owed with interest and compensation (business customers), the reminders you've sent, how to pay, and that you'll start a court claim if it isn't paid or answered by the deadline.
- Customer is a limited company: 14 days is usual.
- Customer is a person, including a sole trader or a homeowner (England and Wales): follow the Pre-Action Protocol for Debt Claims. Give them 30 days to reply and enclose its information sheet, reply form and financial statement. Skipping this can cost you at court.
When the customer is a homeowner
Most domestic trades work is for private customers, and the late payment law doesn't cover them. So:
- Interest or late fees only if they agreed to them in your quote or terms before the work started, and they're reasonable. Don't invent a charge afterwards: it gives them something to argue about.
- Check it isn't a dispute. If they say something's wrong with the work, chasing harder makes it worse. Reply to the specific complaint, offer to look at it, and ask them to pay any part that isn't disputed now.
- Court interest: if you make a county court claim for a fixed amount in England or Wales, gov.uk says interest is "usually 8%" a year. Pick "a homeowner" in the calculator to see the figure.
- Can't pay, not won't pay? A written instalment plan usually beats a court claim.
If they still won't pay
- Mediation. Cheaper and quicker than court, and judges expect you to have considered it.
- A court claim in England and Wales: make a court claim for money online. The court fee depends on the amount (for example £115 for a claim of £1,500.01 to £3,000, as of October 2026) and you can usually claim it back if you win. Claims up to £10,000 normally go to the small claims track. Scotland and Northern Ireland have their own processes.
- Get advice first if the amount is large, the customer disputes the work, or the customer is a company that might be insolvent. Your trade association, Citizens Advice or a solicitor can help.
So it doesn't happen next time
- Put the payment terms on the quote (how to write a quote, with a free quote maker), and get the quote accepted in writing (a "yes, go ahead" text counts as a record). For private customers, write any late-payment fee into those terms.
- Take a deposit or stage payments on bigger jobs, so you're never more than one stage out of pocket.
- Invoice the day the job finishes, with the due date written out ("due 14 November 2026"), not just "30 days".
- Diary the chasers the day you send the invoice: day 1, day 10, day 25.
Let ChatGPT, Gemini or Claude write these for each job. Our free Trades Skills include payment-chaser: tell it "the Hendersons owe £850 for the boiler service, 3 weeks late, I've texted twice" and it drafts the next message in the sequence, works out statutory interest for business customers and plans what to do next. It also includes quote-builder, which puts clear payment terms on every quote. Set-up takes about 3 minutes, no coding.
FAQ
How much interest can I charge on a late invoice in the UK?
If the customer is a business and your contract doesn't set its own rate: 8% a year plus Bank Rate, using Bank Rate on 30 June (debts overdue 1 July–31 December) or 31 December (1 January–30 June). That's 11.75% for debts that went overdue in 2026. Simple interest, by the day.
Can I charge late payment interest to a homeowner?
Not under the late payment law, which only covers business-to-business debts. Only if they agreed to it in your quote or terms and it's reasonable. A county court claim in England or Wales can usually add 8% a year.
How much late payment compensation can I claim?
£40 for debts up to £999.99, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more. Once per invoice, business customers only, on top of interest.
When is an invoice late if we never agreed payment terms?
For business customers, 30 days after the later of the day they got the invoice and the day you finished the work.
Do I charge interest on the VAT too?
Interest runs on the amount the customer owes, which is the invoice total including VAT. Late payment interest and compensation are outside the scope of VAT, so don't add VAT to them.
Does the interest keep going up?
Yes, by the same amount each day until they pay. The rate itself stays fixed at the one that applied when the debt went overdue, even if Bank Rate changes later.
Will charging interest lose me the customer?
It can. Many trades only add it at the final reminder, or waive it if the customer pays by the new date. It's your right, not an obligation. Mentioning it is often enough.
This page is general information written by an AI agent and checked against gov.uk, legislation.gov.uk (SI 2002/1675), the Bank of England and the Ministry of Justice (26 October 2026). It is not legal advice. Rates, fees and rules change: check the current position, and get advice for large or disputed debts. If you spot an error, please open an issue.