When another UK business pays your invoice late, the law gives you more than another reminder. On a qualifying commercial contract you may claim statutory interest — simple interest at 8% plus the Bank of England base rate — plus a fixed compensation sum of £40, £70 or £100.
That right belongs to you, the creditor. It is not a collection guarantee, and it is not something an agency “awards”. Debt Collection UK (a trading style of PASECOM GROUP LTD) introduces B2B claims to independent partner agencies. We are not solicitors and we do not collect debts ourselves.
What does the law say about statutory interest?
Statutory interest comes from the Late Payment of Commercial Debts (Interest) Act 1998. Section 1 implies a term into contracts to which the Act applies: any qualifying debt carries simple interest, called statutory interest.
You do not need a late-payment clause, or a court’s permission, to claim it. You do need a qualifying commercial debt that is actually late, and a contract that has not replaced the right with a different, substantial contractual remedy. GOV.UK states the same point: you can claim interest and debt recovery costs if another business is late paying for goods or a service.
Interest starts the day after the “relevant day” (section 4). In credit-control terms:
- If you agreed a payment date, the invoice is late the day after that date (subject to the 30-day public-authority and 60-day business outer limits).
- If you did not agree a date, GOV.UK treats the payment as late 30 days after the later of the customer getting the invoice and you delivering the goods or service.
Public authorities must usually pay within 30 days. Businesses may agree up to 60 days, or longer if that is not grossly unfair to the supplier. You cannot use a lower interest rate than the statutory rate on a public-authority contract.
Who can claim statutory interest on a late commercial debt?
Section 2 is the gate. The Act applies to a contract for the supply of goods or services where both purchaser and supplier are acting in the course of a business. “Business” includes a profession and the activities of a government department or local or public authority.
Typical UK B2B invoices qualify: company to company, sole trader to client business, contractor to public body.
It does not cover every unpaid bill. A contract of service or apprenticeship (employment) is not a supply of goods or services. Excepted contracts also include consumer credit agreements and contracts intended to operate by way of mortgage, pledge, charge or other security. Consumer (B2C) invoices sit outside this regime.
A “qualifying debt” is an obligation to pay the whole or part of the contract price. An agency can calculate the interest. It cannot create a right you never had.
What is the statutory interest rate? 8% plus Bank of England base rate
GOV.UK describes statutory interest as 8% plus the Bank of England base rate for business-to-business transactions. See Interest on late commercial payments.
The rate is fixed by article 4 of SI 2002/1675: 8 per cent per annum over the official dealing rate in force on:
- 30 June, for interest that starts between 1 July and 31 December; or
- 31 December, for interest that starts between 1 January and 30 June.
That snapshot is taken immediately before the day interest starts. You do not recast the rate every time Bank Rate changes. Check the Bank of England figure for the relevant 30 June or 31 December.
The interest is simple, not compound (section 1).
How do you calculate statutory interest?
GOV.UK’s worked example uses a £1,000 debt and a 0.5% base rate (an illustration, not today’s rate):
- Annual statutory interest = £1,000 × 8.5% = £85.
- Daily interest = £85 ÷ 365 = 23p a day.
- After 50 days = £11.50.
Use the same method with the SI 2002/1675 snapshot that applied when your interest started. GOV.UK advises sending a new invoice if you add interest. A debt collection agency instructed through this site can run the figures; the claim remains yours.
Can I also claim the £40, £70 or £100 compensation?
Yes. Compensation sits on top of statutory interest. Section 5A entitles the supplier to a fixed sum once statutory interest begins to run. GOV.UK states you may charge it 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 |
If reasonable recovery costs are not met by that fixed sum, section 5A(2A) entitles the supplier to the difference. Whether a partner agency’s commission qualifies on your file is fact-specific, not automatic.
When does statutory interest not apply?
It is not a commercial supply between two businesses. Consumer invoices, employment or apprenticeship contracts, consumer credit agreements, and security arrangements (mortgage, pledge, charge) are out.
Your contract already sets a different interest rate that is a substantial remedy. GOV.UK is blunt: you cannot claim statutory interest if there is a different rate of interest in a contract. Sections 8 and 9 add the test: the contractual remedy must be a substantial remedy for late payment. Do not stack statutory interest on top of contractual interest without checking.
Another enactment already gives a right to interest (section 3).
The payment is not yet legally late. Until section 4’s relevant day has passed, interest has not started.
Interest may be remitted because of the supplier’s own conduct (section 5) — for example an invoicing or delivery failure that made timely payment unrealistic.
A genuine dispute may block a clean claim. Statutory interest attaches to a qualifying debt. Inflating a disputed invoice with add-ons does not make the underlying claim stronger.
Claiming statutory interest is not the same as collecting it. The debtor may be insolvent, asset-light, or unwilling. The right is real. Recovery is not guaranteed. If reminders have already failed, passing the unpaid invoice to a specialist is usually more useful than another statement with a larger interest figure.
How statutory interest supports unpaid invoice recovery
On a qualifying B2B file the claim is usually: the unpaid invoice, statutory interest at 8% plus the applicable Bank Rate snapshot, the £40 / £70 / £100 sum per overdue payment, and any extra reasonable recovery costs not covered by that sum. That is leverage in a formal demand. It is not a substitute for the invoice, purchase order, and proof of delivery or completion.
Debt Collection UK can introduce your unpaid invoices to a vetted UK partner agency through the secure claim form. PASECOM GROUP LTD was incorporated in April 2026. We introduce commercial claims; we do not conduct reserved legal work, and we do not promise that interest will be paid.
Frequently asked questions
Do I need a late payment clause in my contract to claim statutory interest?
No. Section 1 implies the right into qualifying commercial contracts. Read your terms anyway: a different contractual rate that is a substantial remedy can replace the statutory rate.
Can I claim statutory interest from a public authority?
Yes, on a qualifying supply. Public authorities must usually pay within 30 days, and you cannot use a lower rate than the statutory rate.
Is statutory interest compound?
No. Section 1 provides for simple interest only.
Can I charge £40, £70 or £100 on every reminder I send?
No. Compensation is a fixed sum once per late payment, in the bands on GOV.UK. You may separately claim reasonable recovery costs the fixed sum does not cover.
Does adding statutory interest mean the debtor has to pay?
No. It is the creditor’s right on a qualifying late commercial debt. It does not compel payment, create assets, or override insolvency.
Can a debt collection agency add statutory interest for me?
A partner agency can calculate and demand it if the Act applies. The right remains yours. Using this site is an introduction to a recovery specialist, not legal advice and not a guarantee of collection.