What the law lets you add to a late business invoice.

Who it covers

Contracts between two businesses, including sole traders and the public sector. It doesn't cover invoices to private individuals.

The interest

8% a year above the Bank of England base rate. The base rate used is the one on 31 December or 30 June before the invoice fell due, and it stays the same until the invoice is paid. It's simple interest, worked out by the day.

Interest starts the day after the due date, so an invoice due on 31 December uses the next half-year's rate. Source: Bank of England.

The fixed sum

Claimed once per invoice. You can also claim reasonable extra costs of recovering the debt.

When it doesn't apply

If your contract sets its own late-payment interest or charges, those apply instead, as long as they're a fair remedy. Check your terms before switching statutory interest on.

What's changing

The Commercial Payments Bill would make late-payment interest mandatory for larger businesses paying smaller ones and cap payment terms at 60 days. It was still going through Parliament in October 2026, and nothing changes until it's law and in force.

Across the UK

The Act applies in England, Wales, Scotland and Northern Ireland. Small-claims routes differ: a money claim in England and Wales, simple procedure in Scotland, and small claims in Northern Ireland. PaidStraight doesn't prepare court documents; its guide to small claims links to each official service. So do time limits: 6 years from the due date in England, Wales and Northern Ireland, and 5 years in Scotland. PaidStraight asks where your business is and follows the right rules.