The Late Payment of Commercial Debts (Interest) Act 1998

In short

Businesses in the UK have an automatic right to claim interest on overdue commercial debts. The right exists by law — not by contract. The supplier does not have to add it to the contract, and the buyer cannot opt out unless the contract provides a "substantial remedy" for late payment.

How interest is calculated

Statutory interest is calculated at 8 percentage points above the Bank of England base rate. The rate in force when the debt becomes overdue is the rate that applies for the entire late-payment period.

Fixed compensation

In addition to interest, the supplier may claim a fixed sum:

£40 for debts under £1,000
£70 for debts between £1,000 and £9,999.99
£100 for debts of £10,000 or more

Source

Late Payment of Commercial Debts (Interest) Act 1998

This page is for general information. It is not legal advice. If you need legal advice, speak to a qualified solicitor.