Late payment interest: what you can charge business customers
Updated 11 October 2026 · 2026/27 tax year
If a business customer pays you late, the law lets you add interest and a fixed compensation fee. Many tradespeople don't know they can.
Who it applies to
Only business customers: builders, landlords, letting agents, companies. Not private customers having work done on their own home.
When it's late
After the payment date you agreed, or 30 days after the invoice (or the work, if later) if you agreed nothing.
What you can claim
- Interest of 8% a year above the Bank of England base rate, from the day it was due
- A fixed fee per invoice: £40 if it's under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more
- Reasonable costs of recovering the debt above that fee
How to claim it
Tell the customer in writing, ideally in your reminder: say what's overdue, the interest so far and the daily rate, and the fixed fee. Often just mentioning it gets the invoice paid.
Let VanBooks do it for you. VanBooks sends polite automatic reminders at 7, 14 and 30 days overdue, and for business customers can add the interest and fixed fee the law allows. Try it free for a month
This guide is general information, not tax advice. Check HMRC's guidance or ask an accountant about your own situation.