On an overdue business-to-business invoice in the UK, you can charge statutory interest at 11.75% a year as of June 2026, plus a fixed compensation sum of £40, £70 or £100, plus your reasonable recovery costs on top. This guide turns those rules into actual numbers: a worked example, and a ready reckoner showing exactly what you are owed at common invoice sizes.
The short answer
You can charge statutory interest of 8% plus the Bank of England base rate, which is 11.75% a year as of June 2026, on the overdue amount, running from the first day it is late. On top of that you can add a one-off fixed fee: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. If your costs of recovering the debt are higher than the fixed fee, you can claim those instead.
The interest rate today
Statutory interest on a worked example. A fixed sum of £40 to £100 is added on top. The rate moves with the base rate.
The statutory rate is 8% a year on top of the Bank of England base rate. With the base rate held at 3.75% in June 2026, that gives 11.75% a year. Day to day, that works out at roughly 3.2 pence per day for every £100 outstanding, or £117.50 a year on every £1,000.
It is simple interest, not compound, so it does not snowball. You calculate it as the overdue amount, times 11.75%, times the number of days late divided by 365.
The fixed compensation by debt size
The fixed compensation sum is set by the size of each overdue invoice. It is a floor, not a ceiling.
| Size of the overdue debt | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 and above | £100 |
A one-off fixed sum per overdue invoice, set by the Late Payment of Commercial Debts Regulations 2013. Source: GOV.UK.
A worked example
Take a £5,000 invoice paid 45 days late, in the first half of 2026, so the rate is 11.75%.
- Interest: £5,000 × 11.75% × (45 ÷ 365) = £72.43
- Fixed compensation (debt in the £1,000 to £9,999.99 band): £70.00
- Total you can add to the £5,000: £142.43, making £5,142.43 due
If chasing that debt cost you more than £70, say a £180 debt-collection agency fee, you could claim the £180 in place of the £70 fixed sum instead.
What you can charge at a glance
Interest for 30 days at the current 11.75% rate plus the fixed sum. The interest portion moves with the base rate, so confirm the live rate before you bill.
Interest at the current 11.75% rate for common invoice sizes and delays, plus the fixed sum that applies. Use it as a quick check; for an exact figure across a changing base rate, use a calculator.
| Invoice amount | 30 days late | 60 days late | 90 days late | Fixed sum |
|---|---|---|---|---|
| £500 | £4.83 | £9.66 | £14.49 | £40 |
| £1,000 | £9.66 | £19.32 | £28.97 | £70 |
| £5,000 | £48.29 | £96.58 | £144.86 | £70 |
| £10,000 | £96.58 | £193.15 | £289.73 | £100 |
| £25,000 | £241.44 | £482.88 | £724.32 | £100 |
Statutory interest at 11.75% a year (June 2026), simple interest, plus the fixed compensation sum. The fixed sum is charged once per invoice, not per period. The base rate changes over time, so check the current rate at the Bank of England before you bill.
Claiming your recovery costs on top
The fixed sum is a floor, not a cap. The 2013 Regulations let you claim the reasonable costs of recovering the debt where they exceed the fixed sum: think solicitor letters, debt-collection agency fees, or court costs. You claim the higher of the two, not both, and you should be able to evidence the cost. For most small overdue invoices the fixed sum is the practical figure; for larger or harder cases, the recovery-cost route is the one that matters.
Can you charge more than the statutory rate
You can set a higher rate in your contract, but only if it offers a substantial remedy that genuinely compensates for or deters late payment and is fair to impose. A modest contractual rate does not override the statutory one, so in practice the statutory 11.75% is the figure most businesses fall back on. Charging a consumer is different: the statutory right covers business-to-business invoices only, and consumer late-payment terms are governed by the Consumer Rights Act 2015 and must not be an unfair penalty.
Frequently asked questions
How much can I charge for a late invoice in the UK?
Statutory interest of 8% plus the Bank of England base rate, which is 11.75% a year as of June 2026, on the overdue amount, plus a fixed fee of £40, £70 or £100 by debt size. For example, a £5,000 invoice paid 45 days late earns about £72 in interest plus £70, so £142 in total.
Is the late payment fee per invoice or per day?
The interest accrues per day, at 11.75% a year on the outstanding amount. The fixed compensation sum is charged once per overdue invoice, not per day or per reminder.
Can I charge a flat late fee instead of interest?
For B2B invoices, the statutory entitlement is interest plus the fixed sum, not an arbitrary flat fee. You can set a different rate in your contract, but it only replaces the statutory right if it offers a substantial remedy. A made-up flat fee with no contractual basis can be challenged.
Does VAT apply to a late payment fee?
No. Statutory interest and the fixed compensation sum are outside the scope of VAT, so you do not add VAT when you raise them, and they stay out of your VAT return.
What if my recovery costs are more than the fixed fee?
You can claim the reasonable costs of recovery instead of the fixed sum where they are higher, for example a debt-collection agency fee. You claim the higher figure, not both, and you should keep evidence of the cost.
The bottom line
At June 2026 rates, an overdue B2B invoice earns 11.75% a year in interest plus a fixed £40, £70 or £100, with your recovery costs claimable on top if they are higher. The numbers are modest on a single small invoice but add up across a ledger, and applying them consistently does more to change a slow payer's habits than another polite reminder.
Sources and further reading
- GOV.UK: charging interest on commercial debt
- Bank of England: interest rates and Bank Rate
- The Late Payment of Commercial Debts Regulations 2013
General information, not legal or financial advice. Interest figures use the 11.75% statutory rate current at June 2026; the Bank of England base rate changes over time. This resource is published by Accounting.Events, powered by Paidnice.
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