Who can charge late payment interest
When another business pays you late, the law lets you add interest and a fixed sum towards the cost of chasing it. That covers a letting agent, a builder you subcontract for, a shop, a landlord with a company, another sole trader buying for their business, a school or a council.
It doesn't cover homeowners paying for work on their own house. The Late Payment of Commercial Debts (Interest) Act is for business-to-business work only, so most domestic jobs aren't covered. For those, see getting paid by homeowners below.
The calculator loads here when JavaScript is on. The worked example and the rate table below show how to do the sum by hand.
Work out what you can claim
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Fill in the amount and the dates to see what you can claim.
How the sum works
- Find the day it became late. The date you agreed, or 30 days after the customer got the invoice or you finished the work (whichever was later) when no date was agreed.
- Find the rate. 8% plus the Bank of England base rate on 30 June (for interest that starts between 1 July and 31 December) or on 31 December (for interest that starts between 1 January and 30 June). The rate is set by the day interest starts, the day after the payment was due.
- Work out a day's interest. The amount owed times the rate, divided by 365.
- Multiply by the days late. Count from the day after it was due to the day it's paid.
- Add the fixed sum once. £40 for a debt under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more. It's charged once for each late payment.
A made-up example
A plumber invoices a letting agent £1,200 for a boiler repair, due on 1 August 2026. It's paid on 30 September 2026, 60 days late. Interest started on 2 August, so the rate is 8% plus the base rate on 30 June 2026 (3.75%): 11.75%.
- A year's interest: £1,200 × 11.75% = £141.00
- A day's interest: £141.00 ÷ 365 = about 38.6p
- 60 days: £23.18
- Fixed sum for a £1,000 to £9,999.99 debt: £70
- Total to claim: £93.18, on top of the £1,200
Late payment interest rates since 2023
Find the half-year in which interest started (the day after the payment was due). The rate stays at that figure for that debt.
| Interest starts | Base rate used | Rate you can charge |
|---|---|---|
| 1 July to 31 December 2026 | 3.75% (on 30 June 2026) | 11.75% |
| 1 January to 30 June 2026 | 3.75% (on 31 December 2025) | 11.75% |
| 1 July to 31 December 2025 | 4.25% (on 30 June 2025) | 12.25% |
| 1 January to 30 June 2025 | 4.75% (on 31 December 2024) | 12.75% |
| 1 July to 31 December 2024 | 5.25% (on 30 June 2024) | 13.25% |
| 1 January to 30 June 2024 | 5.25% (on 31 December 2023) | 13.25% |
| 1 July to 31 December 2023 | 5.00% (on 30 June 2023) | 13.00% |
| 1 January to 30 June 2023 | 3.50% (on 31 December 2022) | 11.50% |
Interest starting from 1 January 2027 uses the base rate on 31 December 2026, which isn't known yet. Check it on the Bank of England's Bank Rate page.
How to claim it
- Check your terms first. If your contract or terms set their own late payment rate, use that one instead. You can't claim the statutory rate on top.
- Send a separate invoice. GOV.UK says to send a new invoice when you add interest, so keep the original as it was and invoice the interest and the fixed sum on their own, quoting the original invoice number.
- Say how you worked it out. The amount, the due date, the rate, the days late and the fixed sum. The copy button above writes those lines for you.
- Keep a record of chasing. As well as the fixed sum, you can claim reasonable costs each time you try to recover the debt, like a debt recovery service.
Many businesses pay as soon as the interest invoice arrives. If they still don't, the Office of the Small Business Commissioner can help small businesses with payment disputes with larger ones, and you can make a claim through the courts.
Getting paid by homeowners
A homeowner who pays late isn't covered by the late payment law, so what's on your quote and invoice matters more. A few things that help:
- Put the payment terms on the quote, before the work starts: when you'll invoice, when it's due and how they can pay.
- Take a deposit on bigger jobs, especially when you're buying materials.
- Invoice the same day with a clear due date, your bank details and a payment reference. The free invoice template has all of that.
- Let them pay on the spot. A customer who can pay by card or Apple Pay while you're packing up rarely becomes a late payer. How card payments work without a reader.
Fewer late payers with Knockround
In Knockround, every invoice is a link with a Pay button. Send it by WhatsApp, text or email, or show the QR code on your phone at the door, and your customer pays by Apple Pay, Google Pay or card. It marks itself paid, the money goes to your own Stripe account and on to your bank, and unpaid invoices stay in front of you until they're settled.
Try it on the plumbing demo, with made-up customers. It's free for 7 days with no card needed, then £19.99 a month.
Written by the Knockround team. Checked against GOV.UK's late commercial payments guidance, the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 and the Bank of England's Bank Rate history on 29 October 2026. This is a guide to the rules, not legal advice.