Claim Debt Recovery Costs for Overdue Payments

The Late Payment of Commercial Debts (Interest) Act 1998 adds an implied term in business-to-business contracts for the supply of goods and services, giving at least 8% a year interest on the price, plus a fixed sum and reasonable costs of recovering the debt.


If your business were owed £1,000 and the Bank of England base rate was 0.5%:

  • the annual statutory interest on this would be £85 (1,000 x 0.085 = £85)
  • divide £85 by 365 to get the daily interest: 23p a day (85 / 365 = 0.23)
  • after 50 days this would be £11.50 (50 x 0.23 = 11.50)

The amount you are permitted to charge is determined by the amount of debt. You may only charge the business once for each payment.

Amount of Debt       What you can Charge Up to
£999.99                                £40
£1,000 to £9,999.99          £70
£10,000 or more                £100

These amounts are set by late payment legislation.

Late Payment Calculator

Please complete the form below to calculate the late payment interest due:


The Late Payment of Commercial Debts (Interest) Act 1998 is a United Kingdom legislation that grants businesses the legal right to impose interest and a set administration fee on overdue invoices. This Act is applicable in England, Scotland, and Northern Ireland.

The Act serves two primary purposes:

1. To provide creditors with compensation for delayed debt payments.

2. To discourage late payments.

However, it is important to note that the Act is only applicable in specific circumstances:

– There must be a legally binding contract between the two involved businesses.

The Late Payment of Commercial Debts Regulations 2002, as amended by the Late Payment of Commercial Debts Regulations 2013, enable a creditor to impose statutory late payment compensation in addition to any debt claim. This is applicable when both the creditor and debtor are engaged in business activities, and the debt arises from the provision of goods and/or services.

The compensation serves two purposes: to reimburse a creditor for the consequences of delayed payment and to discourage a commercial client from consistently exceeding agreed payment terms.

It is stated that when a public authority (or a business where a due date for payment has not been agreed upon) purchases goods or services, the interest on any outstanding payments will commence 30 days after the latest of the following: the receipt of the goods or services; or the receipt of the supplier’s invoice.

The interest rate applicable to late payments for goods or services in business-to-business transactions is known as “statutory interest.” This interest rate is calculated as the sum of 8% and the prevailing Bank of England base rate. It is important to note that statutory interest cannot be claimed if a different interest rate is specified in a contract.