Late payment compensation checker
Fixed compensation is £40, £70 or £100 for each late business invoice, depending on how big the invoice is. Paste in your amounts and see which one applies to each.
For UK business-to-business invoices. Last checked against GOV.UK, legislation.gov.uk and the Bank of England.
| Amount | Band | Fixed sum |
|---|---|---|
| £850.00 | Under £1,000 | £40.00 |
| £1,000.00 | £1,000 to £9,999.99 | £70.00 |
| £9,999.99 | £1,000 to £9,999.99 | £70.00 |
| £10,000.00 | £10,000 or more | £100.00 |
Fixed compensation across 4 invoices: £280.00
Bands: Under £1,000 → £40.00 · £1,000 to £9,999.99 → £70.00 · £10,000 or more → £100.00. Fixed once per late debt, on top of interest.
What the law says
Once statutory interest begins to run on a qualifying debt, the supplier is entitled to a fixed sum in addition to the interest. Section 5A(2) of the Late Payment of Commercial Debts (Interest) Act 1998 sets it at:
- £40 for a debt of less than £1,000;
- £70 for a debt of £1,000 or more, but less than £10,000;
- £100 for a debt of £10,000 or more.
GOV.UK repeats the same three amounts and says you can only charge the business once for each payment.
Things the checker does not decide
- Whether the sum is due yet. It is payable once statutory interest begins to run, which is the day after the payment date (section 4). An invoice that is not yet late has no compensation to claim.
- Whether the Act applies. It covers contracts for the supply of goods or services where the buyer and the seller are each acting in the course of a business (section 2), so it does not cover sales to consumers. Your contract can set its own late payment remedy, but terms that take away the right to statutory interest are void unless the remedy is a substantial one (section 8).
- Extra recovery costs. If your reasonable costs of recovering the debt are more than the fixed sum, section 5A(2A) also lets you claim the difference. Keep the records.
- Interest. That depends on the dates and the Bank Rate on the reference date. The calculator does both together, and the worked examples show the compensation and the interest side by side.
We round an amount to the nearest penny before choosing the band, so £999.995 is treated as £1,000.00. If your invoice total is right on a boundary, check it against the invoice itself. For the longer explanation see the guide to late payment compensation per invoice.
Common questions
Is an invoice of exactly £1,000 in the £40 or the £70 band?
The £70 band. Section 5A(2) gives £40 for a debt “less than £1000” and £70 for a debt “of £1000 or more, but less than £10,000”. The same applies at £10,000, which is £100.
Do several late invoices from one customer add up into one band?
Each invoice is its own debt, so each one is looked at separately. Three late invoices of £400 each give £40 three times, not £70 once. If you are unsure whether two invoices are really one debt, check your contract.
Is there anything on top of the fixed sum?
Yes. Statutory interest, and, if your reasonable costs of recovering the debt are more than the fixed sum, the difference (section 5A(2A)).
General information, not legal advice