Late Payment Rights for UK Tradesmen

Most tradespeople do not know this: if a customer pays late, you have a legal right to charge interest and claim compensation. It is not optional — it is UK law.

The Late Payment of Commercial Debts (Interest) Act 1998 gives every UK business the right to charge statutory interest on overdue invoices. Here is how it works.

When Does It Apply?

The Act applies to all business-to-business transactions. If you are a tradesman invoicing a homeowner (a consumer), it does not apply automatically — but you can include late payment terms in your invoice terms and conditions.

If you are invoicing a business, a landlord, a property developer, or another tradesman, the Act applies automatically — even if you did not mention it in your invoice.

How Much Interest Can You Charge?

The statutory interest rate is 8% per year above the Bank of England base rate. As of early 2026, the base rate is 4.5%, making the total statutory rate 12.5% per year.

Here is how to calculate it:

Fixed Compensation on Top

In addition to interest, you can claim a fixed sum of compensation:

That means on a typical £500 plumbing job that is 30 days late, you could add £5.14 in interest plus £40 in compensation — a total of £45.14 on top of the original invoice.

Should You Actually Charge It?

This is where it gets practical. You have the legal right — but should you exercise it?

• Mention it in your invoice terms."Late payments may incur statutory interest under the Late Payment of Commercial Debts Act 1998." This alone deters late payment.
• Reference it in your chasing messages. At the 14-day mark, mention that you are entitled to charge interest. Most customers pay at this point.
• Only apply charges for repeat offenders. If a good customer pays a few days late once, let it go. If someone is consistently 30+ days late, apply the charges.

What About Consumer Customers?

If you are invoicing a homeowner (not a business), the Act does not apply automatically. But you can include your own late payment terms in your quote or invoice. Something like:

As long as the terms are clearly stated before the work begins (ideally in your quote), they are enforceable.

Let mNudge Handle the Chasing

Knowing your rights is one thing. Enforcing them is another — especially when the customer is a neighbour or a referral.

mNudge sends your invoices on WhatsApp and automatically chases late payers through five escalating stages. At the 14-day mark, your reminder references the Late Payment Act — politely but clearly. You do not have to be the bad guy.