Late payment compensation £40, £70, £100: how to claim it in the UK (2026)
When a business customer pays an invoice late, section 5A of the Late Payment of Commercial Debts (Interest) Act 1998 entitles you to a fixed sum on top of statutory interest: £40 if the debt is under £1,000, £70 if it is £1,000 or more but under £10,000, and £100 if it is £10,000 or more. It is due for each late invoice as soon as statutory interest starts to run, and you can also claim any reasonable recovery costs above that fixed sum. You claim it by adding it to your reminder or letter before action.
The bands
| Amount of the late debt | Fixed sum (section 5A) |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Source: section 5A of the Act. The fixed sum does not depend on how late the payment is: one day late or one year late, the amount is the same.
When you can claim it
- Business-to-business only: both you and your customer must be acting in the course of a business. Sole traders count; consumers do not.
- Once statutory interest starts to run: the day after the agreed due date, or 30 days after delivery or notice of the debt if no date was agreed.
- Per invoice: the Act attaches the sum to each qualifying debt. Three late invoices of £500, £2,000 and £12,000 give £40 + £70 + £100 = £210.
- Even if the invoice is later paid: the entitlement arises when the debt becomes late, so you can still claim it after a late payment.
- Not where your contract replaces statutory interest: if your terms set their own late payment remedy, the fixed sum linked to statutory interest is not added; check your terms.
Reasonable recovery costs on top
Since 2013, section 5A(2A) lets you claim the difference when your reasonable costs of recovering the debt are higher than the fixed sum, for example a debt collection agency's fee. Keep invoices or receipts for those costs; you will need to justify them if the debtor disputes them or the claim goes to court.
How to claim it
- Work out which band each invoice falls into.
- Add statutory interest at 8% over the reference Bank Rate (11.75% for debts that became late in 2026).
- Send a reminder or a letter before action setting out the debt, the interest, the fixed sums and the total, with a deadline to pay. If the customer is a sole trader, follow the Pre-Action Protocol for Debt Claims (30 days to reply, Information Sheet and Reply Form enclosed).
- If the debt is still unpaid, include the interest and the fixed sums in your court claim.
The late payment calculator and letter applies the right band to each invoice, adds statutory interest to the day and prepares the letter.
Examples
| Invoice | Days late | Statutory interest at 11.75% | Fixed sum | Total claim |
|---|---|---|---|---|
| £750 due 15 Feb 2026, unpaid on 16 May 2026 | 90 | £21.73 | £40 | £811.73 |
| £12,000 due 20 Jun 2026, unpaid on 19 Aug 2026 | 60 | £231.78 | £100 | £12,331.78 |
FAQ
Do I have to mention the compensation on my invoices? No. It is a statutory right. Stating it in your payment terms can still encourage prompt payment.
Can I claim both the fixed sum and my actual recovery costs? Section 5A(2A) gives the fixed sum plus the difference between it and your reasonable recovery costs, not both in full. If an agency charges you £250 to recover a £5,000 debt, the claim is £70 plus £180.
Can I claim it from a consumer? No. The Act does not cover consumer contracts.
What if the customer paid part of the invoice before the due date? The Act sets the band by the amount of the debt. The calculator applies it to the amount still owed when the invoice became late: a £1,200 invoice with £300 paid on time leaves a £900 late debt, which gives £40. If you band it on the full invoice instead, say so in your letter.