Can a UK Company Charge Interest on Late Invoices?

Yes. A UK limited company can charge interest on qualifying late business-to-business (B2B) invoices. UK late-payment rules allow businesses to claim statutory interest when another business pays an invoice late.

How Much Interest Can a UK Company Charge?

For qualifying B2B transactions, statutory interest is generally:

8% per year + the Bank of England base rate

Interest normally starts accruing from the day after the payment becomes overdue.

For example:

Invoice: £5,000
Due date: 30 September
Overdue from: 1 October

When Is an Invoice Considered Late?

If payment terms have been agreed, the invoice becomes overdue once the payment due date has passed.

Common terms include:

• Net 7
• Net 14
• Net 30
• Net 60

If no payment date was agreed, payment generally becomes late after the applicable statutory 30-day period.

Can a UK Company Charge a Late-Payment Fee?

For qualifying commercial debts, a company may also be able to claim fixed debt-recovery costs:

• Under £1,000 → £40
• £1,000–£9,999.99 → £70
• £10,000 or more → £100

These amounts can potentially be claimed in addition to statutory interest.

What If the Contract Already Specifies Interest?

If your contract contains its own late-payment interest provisions or another substantial remedy, the statutory interest rules may not apply in the usual way.

Check the agreed contract terms before calculating additional charges.

Do You Have to Charge Interest?

No. A company can choose whether to exercise its right to charge late-payment interest.

For an important customer, you might first send a payment reminder before adding interest or recovery costs.

What Should You Put on the Invoice?

A simple clause could state:

Payment Terms: Net 30
Payment Due: 30 September 2026
Late payments may be subject to interest and recovery costs in accordance with applicable UK legislation.

Does This Apply to Consumers?

The statutory commercial late-payment regime is primarily designed for business-to-business and certain public-sector transactions.

Different rules and consumer protections apply when customers are individuals acting as consumers.

Final Answer

Yes. A UK company can charge interest on qualifying late B2B invoices.

The statutory interest rate is generally:

8% + Bank of England base rate

The company may also be entitled to fixed recovery costs of £40, £70 or £100, depending on the amount of the outstanding debt.

Clear payment terms and an exact due date on every invoice can help reduce late payments and make it easier to manage overdue accounts.

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