Late paying clients: a UK guide to interest and compensation

When does an invoice become late?

• If you and your client agreed a payment date, the invoice is late the day after that date.
• Agreed terms must usually be within 60 days for business customers and 30 days for public authorities. Longer terms with a business are allowed only if they're fair to both sides.
• If you didn't agree a payment date, the law says payment is late 30 days after the customer gets the invoice, or after you deliver the goods or service if that's later.

These rules cover business-to-business sales. They don't apply to invoices you send to private individuals (consumers).

Statutory interest: 8% plus the base rate

For business-to-business debts you can charge "statutory interest" of 8% a year plus the Bank of England base rate. You can't use it if your contract already sets a different interest rate.

To work it out: amount owed × annual rate ÷ 365 gives the daily interest, then multiply by the number of days late.

The base rate was 3.75% when this page was checked on 16 October 2026, which makes statutory interest 11.75% a year. Strictly, the rate that applies is the base rate on 30 June (for debts that become late from 1 July) or on 31 December (from 1 January).

Calculate interest on an invoice

Fixed compensation for recovery costs

On top of interest, you can claim a fixed sum once per late invoice for the cost of chasing it:

• Up to £999.99: £40
• £1,000 to £9,999.99: £70
• £10,000 or more: £100

You may also be able to claim other reasonable costs of recovering the debt.

Worked examples

Both use statutory interest of 11.75% (8% plus a 3.75% base rate).

• £900 invoice, 15 days late: £900 × 11.75% ÷ 365 × 15 = £4.35 interest, plus £40 compensation, so £44.35 on top of the £900.
• £2,500 invoice, 30 days late: £2,500 × 11.75% ÷ 365 × 30 = £24.14 interest, plus £70 compensation, so £94.14 on top of the £2,500.

If you decide to add interest, send the client a new invoice that shows it.

Chasing a late invoice without falling out

1. Before it's due: put clear payment terms and the due date on every invoice, and mention that late payment interest may apply.
2. A few days late: send a friendly reminder with the invoice attached. Plenty of late payments are just missed emails.
3. Two weeks or so late: send a firmer reminder that names the due date, the amount and that you're entitled to statutory interest and compensation.
4. Still unpaid: send a final written request with a deadline and an updated invoice that adds the interest and compensation.
5. Last resort: consider a court claim, and check GOV.UK for how the process works first.

Keeping every invoice, due date and reminder in one place makes it easy to see who's late and by how much.

Track every invoice in one sheet

The UK Freelance Invoice & Late Payment Tracker from Tidy Sheets logs invoices and clients, works out due dates and status, flags what's overdue, works out statutory interest and compensation automatically, prints invoices and includes ready-to-copy reminder messages. It's coming to the shop soon. In the meantime, the Free £1,000 Trading Allowance Checker is ready to download.

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Planning for your tax bill too? Try the free tax set-aside calculator.

Official sources

When a payment becomes late (GOV.UK)
Interest on late commercial payments (GOV.UK)
Claim debt recovery costs on late payments (GOV.UK)
Bank of England base rate

This page is for UK business-to-business invoices with no contractual interest rate. Contracts with their own late payment terms, consumer sales and disputed invoices are outside its scope.