How to Charge Statutory Interest on Late UK Invoices

Your Legal Right to Late Payment Interest

Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest on overdue B2B invoices. This applies regardless of what your contract says — it's automatic by law.

The Formula

8% + Bank of England Base Rate

As of May 2026, the base rate is ~5%, so the statutory rate is approximately 13% per annum.

Example Calculation

Invoice: £1,000
Due date: 15 May 2026
Paid date: 15 June 2026 (31 days late)

Interest calculation:
Daily rate: 13% ÷ 365 = 0.0356% per day
31 days overdue: 0.0356% × 31 = 1.1%
Interest owed: £1,000 × 1.1% = £11

Total owed: £1,000 + £11 = £1,011

How to Enforce It on Your Invoices

Add this line to your invoice footer:

"Late Payment Interest:
Under the Late Payment of Commercial Debts (Interest) Act 1998,
statutory interest at 8% + Bank of England Base Rate
(currently ~13% per annum) will be charged on any amount
unpaid more than 30 days from invoice date."

Important Caveats

• B2B only: Applies to invoices between businesses. NOT to consumer invoices.
• Must be mentioned: Write it on the invoice to enforce it (though the right exists by law anyway)
• Doesn't apply to disputed invoices: If the customer disputes the amount, you can't charge interest
• Calculate daily: Interest accrues from day 31 onwards

Reality Check

Charging interest damages relationships. Most freelancers mention it as a deterrent but don't enforce it. Corporate clients expect this clause and aren't offended by it.

FAQ

Can I charge interest on late payments to consumers?

No. The Late Payment Act only applies to B2B. Consumer invoices don't have statutory interest rights.

What if I forget to mention it on the invoice?

You still have the legal right. The Act applies automatically. But mentioning it shows you're serious.