Can You Charge Interest on a Late Invoice?

You sent the invoice on the first of the month. Six weeks and two reminders later, the money still hasn't landed.

For most business-to-business invoices in the UK you have a legal right to charge late payment interest.

The rule covers goods and services one business sells to another, plus sales to public sector bodies. Invoices to individual customers fall under separate consumer rules.

When an invoice counts as late

If you and your client agreed a payment date, the invoice is late once that date passes.

Between businesses, agreed terms should usually be 60 days or less. When your client is a public authority, terms should usually be 30 days or less. You can agree longer terms with another business, but they have to be fair to both of you.

If you never agreed on a date, the law gives your client 30 days. The count starts when they receive the invoice, or when you deliver the goods or finish the service.

How much interest you can charge

Statutory interest is 8% plus the Bank of England base rate.

You work out the yearly amount on the unpaid invoice, divide it by 365 and multiply by the number of days late.

The base rate you use depends on when your invoice went late.

If it went late between January and June, use the rate on the 31 December before. For July to December, use the rate on 30 June. The Small Business Commissioner has a free interest calculator that handles the dates for you, which saves some squinting at a spreadsheet.

If your contract sets its own late payment rate, you charge that instead, but it still has to properly make up for the delay. If a clause sets the rate so low it barely counts, the clause can be void, and then statutory interest applies.

The fixed fee on top

You can also claim a fixed sum towards the cost of chasing the debt. The amount depends on the size of the invoice:

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

You can charge that sum once per invoice. If chasing costs you more, for example a solicitor's letter, you can also claim reasonable recovery costs above it.

You have up to six years from the end of the payment terms to claim interest (five in Scotland). An old invoice you'd mentally written off might still be fair game.

How to claim it

When you add interest, send your client a new invoice that includes:

• the original invoice number and amount
• how many days late the payment is
• the interest rate you've used and the interest total
• the fixed sum you're claiming
• a reference to the Late Payment of Commercial Debts (Interest) Act 1998

Naming the Act on the invoice shows you know your rights, and for future work, you can also add a short line about late payment interest to your normal invoice template.

Clear payment details help too, because every invoice should make it easy to pay you in one go. With an Ampere business account, you get a GBP account with a UK sort code and a EUR account with an IBAN, so UK and EU clients can both pay you straight in. Open your account online and add the details to your invoice template.

Keeping the client relationship

Plenty of small businesses have the right to charge interest on overdue invoices and never use it, mostly because they don't want to upset a client they rely on.

A friendly middle ground is to mention the interest in a reminder and drop it if they pay within a week. You can always save the full charge for clients who make late payment a habit.

What could change soon

The government's Commercial Payments Bill is going through Parliament. It was introduced in the House of Lords in May 2026 and reached report stage there on 15 September.

As drafted, the Bill would cap payment terms at 60 days for most business-to-business contracts. It would also make statutory interest mandatory, so a contract couldn't sign it away. The Small Business Commissioner would get new powers to investigate bigger businesses that keep paying late and fine them.

The Bill still has to pass both Houses, so today's rules apply to every invoice you send now.

If a client is past their due date right now and your contract doesn't set its own rate, the calculator will tell you what they owe in a couple of minutes, and you can send the new invoice today.