Guide · checked 09/10/2026
Late payment compensation: the £40, £70 and £100 fixed sums
When another business pays you late, you can claim a fixed sum towards the cost of recovering the debt, on top of statutory interest: £40 if the debt is under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more. It becomes payable as soon as statutory interest starts, the day after the due date.
The three bands
| Size of the debt | Fixed sum |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
You can charge it once for each late payment, which in practice usually means once for each invoice. Use the full amount of the invoice including VAT when you work out the band and the interest; the Office of the Small Business Commissioner gives the same advice. The fixed sum and the interest themselves do not have VAT added.
If your recovery costs are higher
If the reasonable costs of recovering the debt are more than the fixed sum, the Act lets you claim the difference as well. You cannot claim the fixed sum and then the full costs on top; the extra is the gap between the two.
When you cannot claim it
- The buyer is a consumer. The Act only covers contracts where both sides are acting in the course of business (public bodies count as businesses here).
- Your contract sets its own remedy for late payment that is a “substantial remedy”. It counts as substantial unless it is too small to compensate you or to deter late payment, and it would also be unfair to rely on it.
Not sure what you are owed? The calculator works out the band, the interest and the daily rate for your invoice.
Questions
How much compensation can I claim for a late payment?
A fixed sum of £40 for a debt under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more, on top of statutory interest.
Is the £40, £70 or £100 charged per invoice?
The Act gives one fixed sum for each late payment (each qualifying debt). GOV.UK says you can charge it once for each payment, which usually means once per invoice.
Can I claim more than the fixed sum?
Yes, if your reasonable costs of recovering the debt are higher. You can claim the difference between those costs and the fixed sum.