How the rate is set
The rate is 8% over the Bank of England rate in force on 31 December, for interest that starts from January to June, or on 30 June, for interest that starts from July to December. It is simple interest, worked out day by day.
An invoice of £5,000 due on Wednesday 30 September 2026 and paid 31 days late carries interest at 11.75% a year: £49.90. Add the fixed sum of £70, and you can claim £119.90.
The fixed sum
On top of the interest, the Act allows a fixed sum for the cost of recovering the debt: 40 pounds on a debt under 1,000 pounds, 70 pounds under 10,000, and 100 pounds on anything larger.
Check your contract first
If your contract sets its own fair remedy for late payment, that can replace statutory interest. Where no payment date was agreed, interest starts 30 days after the work was done or the invoice received, whichever is later.
Questions
What is the late payment interest rate now?
For interest that starts in 2026 it is 11.75% a year: 8% over the 3.75% Bank Rate in force on 31 December 2025 and on 30 June 2026.
Does it apply to every invoice?
To business-to-business debts under contracts for goods or services, unless the contract provides its own fair remedy. Scotland has its own order under the Act, so check it for Scottish debts.
Sources
The rates, thresholds and dates on this page come from these official sources, read on 31 October 2026.
- legislation.gov.uk: the 8% rate and its reference dates, SI 2002/1675 article 4
- Bank of England: Bank Rate history
- legislation.gov.uk: Section 5A, the fixed sums
- legislation.gov.uk: Late Payment of Commercial Debts (Interest) Act 1998
- GOV.UK: Late commercial payments: charging interest and debt recovery