Late payment interest in construction: what you can claim

Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can claim statutory interest of 8% a year above the Bank of England reference rate on a late commercial payment, plus a fixed sum for the cost of recovery.

The fixed sums

• £40 where the debt is under £1,000.
• £70 where the debt is £1,000 to £9,999.99.
• £100 where the debt is £10,000 or more.

You can also claim reasonable recovery costs above that.

The interest rate

The rate is 8% above the Bank of England base rate, using the base rate on 30 June or 31 December, whichever applies to the period the payment became late. The reference rate is reset twice a year.

Things to check

Your contract may set its own interest terms, and the Act applies where there is no substantial contractual remedy for late payment. Keep the date the payment fell due and the date it was received.

Open the free late payment interest calculator.

Common questions

How much interest can I charge on a late payment?

The statutory rate is 8% a year above the reference base rate, plus a fixed sum of £40, £70 or £100 depending on the size of the debt, if the Act applies to your contract.

Is there a calculator?

Yes, the free late payment interest calculator on this site works out the interest and compensation for you.

This page is general information for UK construction subcontractors and is not legal advice. Contracts differ, so check yours, and take advice on a specific dispute.