Late Payment Law UK: Interest & Recovery Costs

Under the Late Payment of Commercial Debts (Interest) Act 1998: • You can charge interest on late payments: 8% + Bank of England base rate (currently ~13%) • You can claim a fixed recovery cost: - Up to £999.99: £40 - £1,000-£9,999.99: £70 - £10,000+: £100 • These rights are statutory — they apply even if not in your contract

If your contract doesn't specify payment terms, the default is: • 30 days from invoice date or delivery of goods/services (whichever is later)

For public authority contracts: maximum 30 days (cannot be extended).

For business-to-business: can be extended by agreement, but terms over 60 days must be fair.

Steps: 1. Include your payment terms and late payment notice on every invoice 2. Send a formal reminder when payment is overdue 3. Calculate interest and fixed costs 4. Issue a formal late payment notice/demand 5. Consider using the Small Claims Court (claims up to £10,000) 6. Use the statutory winding-up petition threat for larger debts