What is the current UK statutory interest rate for late commercial payments?

As at June 2026, the Bank of England base rate is 3.75% and has been held at that level since December 2025. The statutory interest rate under the Late Payment of Commercial Debts (Interest) Act 1998 is therefore 3.75% + 8% = 11.75% per annum (simple, not compound). The rate is fixed for each six-month period by reference to the BoE base rate at the immediately preceding 31 December (for debts where interest started 1 January – 30 June) or 30 June (for debts where interest started 1 July – 31 December), under SI 2002/1675 art 4.

How much is the fixed-sum compensation per overdue invoice?

Under Regulation 5A of the Late Payment of Commercial Debts Regulations 2002 (as amended), the fixed-sum compensation is £40 where the debt is less than £1,000; £70 where the debt is £1,000 or more but less than £10,000; and £100 where the debt is £10,000 or more. The fixed sum applies per qualifying debt — so if you have three overdue invoices each between £1,000 and £10,000, you can claim 3 × £70 = £210 in fixed sums, not just £70 once.

Can I recover my actual costs of chasing the debt?

Yes — under Regulation 5B of the LPCDR 2002 (inserted by LPCDR 2013 in implementation of Directive 2011/7/EU), the British supplier is entitled to any reasonable costs of recovering the debt insofar as they exceed the fixed sum. This typically includes UK solicitor pre-action letter fees, debt-collection agency fees, and credit-control time at a reasonable hourly rate. The template generates the Reg 5B clause with an itemised breakdown — a key advantage over generic UK late-payment letters.

Does the LPCDA 1998 apply to my consumer customers?

No — the Late Payment of Commercial Debts (Interest) Act 1998 only applies to commercial contracts where BOTH supplier and customer are acting in the course of a business. For sales to individual UK consumers, the LPCDA does not apply: the British supplier cannot claim the statutory 8% interest, fixed sum or Reg 5B recovery costs under that Act. Instead, the demand follows the 2017 Pre-Action Protocol for Debt Claims with a 30-day reply form, financial statement and the court-interest fallback under s.69 County Courts Act 1984. Our template switches between the two frameworks automatically based on the customer type.

When can I serve a statutory demand on a corporate customer?

Under section 123(1)(a) of the Insolvency Act 1986, a UK statutory demand is available where a corporate debtor fails to pay an undisputed debt exceeding £750. If the company does not pay within 21 days of service, the supplier can present a winding-up petition. The £750 threshold has not been increased since 1986 — it remains the position in the United Kingdom as at June 2026. For individual debtors, the bankruptcy threshold is £5,000 under s.267(4). Do NOT use statutory demand where the debt is disputed in good faith — British courts treat this as an abuse of process.

Is the 2026 UK late-payment reform now in force?

Not yet. On 24 March 2026 the UK Government published its response to the Late Payment Consultation, signalling an intention to legislate the most significant late-payment reforms in over 25 years — including making 8% above the Bank of England base rate the mandatory statutory interest rate, removing the current ability for parties to displace it with a "substantial remedy" contractual clause under s.8 LPCDA. Implementing legislation has not yet been enacted as at June 2026, and the existing s.8 carve-out remains live. The template will be updated when reform legislation is enacted.

What if my customer disputes the debt?

A formal Late Payment Demand under LPCDA is appropriate where the debt is UNDISPUTED — that is, you are owed the money under a clear contractual obligation and the customer has not raised a genuine cross-claim. Where the customer has raised a bona-fide dispute or cross-claim (e.g. defective goods, alleged breach of contract on the supplier's side), the UK demand should NOT threaten statutory demand — that risks an injunction and adverse costs. Consider mediation or a Pre-Action Protocol letter instead. Where the dispute is plainly bad-faith or vexatious, document the disputed points in correspondence before proceeding.

FinanceUnited Kingdom

UK Late Payment Demand Letter Template — LPCDA 1998

Draft a UK Late Payment Demand under the Late Payment of Commercial Debts (Interest) Act 1998 (LPCDA). The demand auto-calculates statutory interest at 8% above the Bank of England base rate (currently 11.75% per annum simple as at June 2026), claims the LPCDR 2002 Reg 5A fixed sum (£40 / £70 / £100 per qualifying debt), and unlocks LPCDR 2002 Reg 5B reasonable recovery costs above the fixed sum. Covers Pre-Action Protocol for Debt Claims (B2C), Insolvency Act 1986 statutory demand (corporate debtor > £750) and the 2026 government late-payment reform agenda. UK SMEs lose an estimated £22 billion annually to late payment — this template puts that money back in your account.

Create Your Late Payment Demand — Late Payment of Commercial Debts (Interest) Act 1998

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Wellings and Hartley Components Ltd

14 Bridge Industrial Estate, Manchester M5 3LP · Co. No. 06128432 · VAT GB 943 8521 06

0161 832 4017

credit@wellings-hartley.co.uk

2026-06-03

Ashdown Engineering Services Ltd

28-30 Mayflower Road, Sheffield S9 2DR · Company No. 09472831

RE: FORMAL DEMAND FOR PAYMENT — LATE PAYMENT OF COMMERCIAL DEBTS (INTEREST) ACT 1998

Your ref: PO-2026-0418 · Sum due: £22,075.00

Dear Ashdown Engineering Services Ltd,

We write further to your continued failure to pay sum(s) properly invoiced and now overdue. This letter is a formal demand for payment and asserts the supplier's statutory entitlements where applicable. Please read the rest of this letter carefully — and take advice if needed — before the response deadline at clause 7.

SCOPE — THE CONTRACT AND THE LATE PAYMENT ACT

1.1 The sum(s) below are due under the contract between us for the supply of precision-machined stainless-steel components per Purchase Order PO-2026-0418. 1.2 The supply was made in the course of business by us to a customer acting in the course of business, so falls within section 2 of the Late Payment of Commercial Debts (Interest) Act 1998. The contract is not a regulated consumer-credit agreement under the Consumer Credit Act 1974 and is therefore a qualifying contract under the Act.

OVERDUE INVOICES

2.1 The following invoices remain wholly or partly unpaid as at the date of this letter:

SCHEDULE OF OVERDUE INVOICES

Invoice	Due date	Net outstanding (GBP)	Fixed sum (LPCDR 2002 Reg 5A)
WH-INV-04122	2026-05-02	£14,750.00	£100.00
WH-INV-04157	2026-05-18	£6,280.00	£70.00
WH-INV-04184	2026-05-30	£835.00	£40.00
Principal sub-total		£21,865.00	£210.00

STATUTORY INTEREST AND FIXED-SUM COMPENSATION

3.1 Interest. Interest accrues on the sum(s) at clause 2 from the day after the relevant due date at 11.75% per annum (being 3.75% Bank of England base rate at the immediately preceding 31 December plus the statutory 8 percentage points under the Late Payment of Commercial Debts (Rate of Interest) (No.3) Order 2002). Interest is simple, not compound, and continues to run until payment.
3.2 Fixed-sum compensation. Under Regulation 5A of the Late Payment of Commercial Debts Regulations 2002 (as amended), a fixed sum compensation of £210.00 is payable in respect of the overdue sum(s) (£40 for any debt < £1,000; £70 for any debt £1,000-£9,999; £100 for any debt ≥ £10,000, applied per qualifying debt).
3.3 Substantial-remedy carve-out. Under section 8 of the 1998 Act any term of a contract is void to the extent that it purports to exclude or vary the right to statutory interest and the fixed sum, save where the contract provides a substantial contractual remedy for late payment.

PATTERN OF LATE PAYMENT

4.1 The supplier observes the following pattern of late payment on the customer's account, which is relevant context to any subsequent application for costs on the indemnity basis and to any reference to the Small Business Commissioner:
Q1 2026: 3 invoices paid an average 22 days late (Jan-Mar).
Q2 2026: 3 further invoices now wholly unpaid 30+ days past due (Apr-May).
Six consecutive invoices outside the 30-day contract payment term — a sustained pattern, not an isolated event.

REASONABLE COSTS OF RECOVERY (LPCDR 2002 REG 5B)

5.1 Under Regulation 5B of the Late Payment of Commercial Debts Regulations 2002 (as inserted by the Late Payment of Commercial Debts Regulations 2013 in implementation of Directive 2011/7/EU), the supplier is entitled, in addition to the fixed sum, to any reasonable costs of recovering the debt in so far as they exceed the fixed sum.
5.2 The actual costs of recovery reasonably incurred to date are £850.00, broken down as follows:
Credit-control time (4 hours at £55) — £220.00
Solicitor pre-action letter (Wellings and Co LLP) — £450.00
Commercial debt-collection agency instruction fee — £180.00
5.3 The recoverable amount above the fixed sum is therefore £640.00. We reserve the right to add further reasonable costs (including solicitor fees and court fees) as they are incurred.

NOTICE OF INTENTION TO SERVE STATUTORY DEMAND

7.1 If the sum(s) above are not paid in full by the deadline at the next clause, the supplier may serve a statutory demand on the customer under section 123(1)(a) of the Insolvency Act 1986 (corporate debtor unable to pay debt > £750), without further notice. Failure to comply with a statutory demand within 21 days is evidence of insolvency on which a winding-up petition may be founded.
7.2 The current threshold for corporate statutory demands is £750. The current threshold for an individual bankruptcy petition is £5,000 (Insolvency Act 1986 s.267(4)).

REPORTING ON PAYMENT PRACTICES (DUTY TO REPORT)

9.1 Where the customer is a large business within the meaning of the Reporting on Payment Practices and Performance Regulations 2017 (SI 2017/395) (as amended), it is subject to a statutory duty to publish information about its payment performance every six months. Sustained late payment is a relevant practice that must be reported. 9.2 The Small Business Commissioner (under Part 1 of the Enterprise Act 2016) may also be notified, and complaints may be made to the Commissioner under section 4 of that Act.

AUTOMATED DECISION-MAKING SAFEGUARD

10.1 Where the customer has been subject to any automated decision-making by the supplier (for example, automated dunning, credit-stop or referral to debt-collection) the supplier confirms that no decision producing legal or similarly significant effects has been taken solely by automated processing without human review, in accordance with Article 22 UK GDPR and the ICO's 2024 guidance on AI and data protection. 10.2 The customer may request meaningful information about the logic involved and the significance of any such processing under Articles 13(2)(f), 14(2)(g) and 15(1)(h) UK GDPR, and may seek human review under Article 22(3) UK GDPR.

DEMAND FOR PAYMENT

You are formally required to remit the sum of £22,075.00 (being the principal outstanding plus the statutory fixed sum where applicable), together with accrued interest at 11.75% per annum calculated to the date of payment, within 14 days of the date of this letter to the supplier's nominated account. Payment details will be provided on request.

10.

DOCUMENTS ENCLOSED / RELIED UPON

The following documents are enclosed or are otherwise relied upon:
Annex 1 — Copy invoices WH-INV-04122, WH-INV-04157, WH-INV-04184
Annex 2 — Statement of account at 03/06/2026
Annex 3 — Email chain 12/05/2026 to 28/05/2026

11.

NEXT STEPS — RECOVERY ACTION ON DEFAULT

If the sum demanded is not received in cleared funds within 14 days of the date of this letter (or if no proposal for payment that the supplier accepts in writing is received within the same period), the supplier reserves the right to commence a statutory demand under section 123(1)(a) of the Insolvency Act 1986 (corporate debtor > £750), without further notice, and the matter may proceed to a winding-up petition. No further warning will be given. Statutory interest continues to accrue until the date of payment.

12.

GOVERNING LAW

This demand and any subsequent proceedings are governed by the law of England and Wales. In Scotland, equivalent statutory interest provisions are contained in The Late Payment of Commercial Debts (Scotland) Regulations 2002.

YOURS FAITHFULLY,

Olivia Margaret Pearson

Head of Credit Control, for and on behalf of Wellings and Hartley Components Ltd

Date: ____________________

Available as a print-ready PDF or an editable Microsoft Word (.docx) file.

What Is a UK Late Payment Demand Under LPCDA 1998?

A UK Late Payment Demand is a formal letter sent by a supplier to a customer in respect of one or more overdue invoices, served under the Late Payment of Commercial Debts (Interest) Act 1998 ("LPCDA"). The Act applies to commercial contracts within the United Kingdom — both supplier and customer must be acting in the course of a business — and gives the British supplier a statutory entitlement to three things: (i) statutory interest at 8% per annum above the Bank of England base rate; (ii) a fixed-sum compensation of £40, £70 or £100 depending on the size of the debt; and (iii) reasonable costs of recovery above the fixed sum.

Under section 4 of the LPCDA, statutory interest starts to run from the day after the agreed payment date or, where none was agreed, 30 days after the later of delivery / completion of the supply and the date the supplier gave notice of the amount payable (typically the invoice date). The rate is fixed for each six-month period by reference to the Bank of England base rate at the immediately preceding 31 December (for debts where interest started 1 January – 30 June) or 30 June (for debts where interest started 1 July – 31 December), under the Late Payment of Commercial Debts (Rate of Interest) (No.3) Order 2002 (SI 2002/1675).

In the United Kingdom, the LPCDA does not apply to consumer (B2C) contracts. Where the customer is an individual rather than a business, the British supplier must instead follow the Pre-Action Protocol for Debt Claims 2017 with its 30-day reply form / financial statement framework, and claim court interest under section 69 of the County Courts Act 1984. Our UK template switches automatically between the two frameworks based on the customer type — generating either the LPCDA statutory demand or the consumer-debt PAP letter as appropriate.

What's Covered in This UK Template

Our UK Late Payment Demand template auto-calculates the statutory entitlements and produces a formal demand letter compliant with the Late Payment of Commercial Debts (Interest) Act 1998 and the LPCDR 2002 / 2013.

Supplier-to-Customer Letterhead

A British supplier letterhead with company number, VAT registration, sender details and date — sent on a formal demand-letter basis as required by UK debt-recovery practice.

B2B vs B2C Auto-Switching

Pick "Limited company / Partnership / Sole trader (B2B)" or "Individual / consumer" — the template selects between the LPCDA framework and the 2017 Pre-Action Protocol for Debt Claims automatically.

Single or Multi-Invoice Schedule

Demand a single overdue invoice or unlock the schedule of overdue invoices — each invoice gets its own fixed-sum band (£40 / £70 / £100) per LPCDR 2002 Reg 5A.

Statutory Interest — 8% Above BoE Base

Auto-calculated at the Bank of England base rate plus 8 percentage points (3.75% + 8% = 11.75% as at June 2026). Reference rate fixed for the six-month period under SI 2002/1675 art 4.

LPCDR 2002 Reg 5A Fixed Sum

Fixed sum compensation auto-applied per qualifying debt: £40 (debt < £1,000), £70 (£1,000-£9,999), £100 (≥ £10,000). Applies per overdue invoice, not once across the balance.

LPCDR 2002 Reg 5B Recovery Costs

Expert mode unlocks the reasonable-recovery-costs clause introduced by LPCDR 2013 in implementation of Directive 2011/7/EU — solicitor fees, debt-collection agency costs and credit-control time recoverable above the fixed sum.

s.8 LPCDA Substantial-Remedy Rebuttal

Where the British customer's standard terms purport a below-statutory contractual interest rate, the s.8 LPCDA rebuttal clause (citing DEFRA v ASDA Stores [2003] EWHC 2436 (TCC)) asserts statutory interest applies.

Statutory Demand Warning (Insolvency Act 1986)

For UK corporate debtors and debts > £750, the demand carries a Notice of Intention to Serve Statutory Demand under Insolvency Act 1986 s.123(1)(a) — failure to comply within 21 days founds a winding-up petition.

Pre-Action Protocol for Debt Claims (B2C)

Where the customer is a UK individual, the demand follows the 2017 Pre-Action Protocol with a 30-day reply form, financial statement, debt-advice extension and StepChange / Citizens Advice referral.

Reporting on Payment Practices

Optional reference to the Reporting on Payment Practices and Performance Regulations 2017 (SI 2017/395) — large customers are required to publish payment performance every six months. Small Business Commissioner (Enterprise Act 2016 Pt 1) escalation noted.

Article 22 UK GDPR AI Safeguard

Where the British supplier's dunning chain has used automated credit-stop or AI scoring, the Article 22 UK GDPR safeguard clause confirms human review and the customer's right to meaningful logic information under the ICO's 2024 AI guidance.

Governing Law — E&W / Scotland / NI

Pick the British governing law and the equivalent Scottish provisions (Late Payment of Commercial Debts (Scotland) Regulations 2002) are referenced for cross-border accounts.

How to Create a UK Late Payment Demand

Follow these steps to draft a compliant UK Late Payment Demand under the LPCDA 1998.

1
Enter Supplier (Sender) and Customer (Debtor) Details
Identify the British supplier — registered company name, Companies House number, VAT registration and registered office address — and the sender (credit control, finance director). Identify the customer with full registered or trading address. The accuracy of these details is critical because the demand may be relied on later in UK Court or statutory-demand proceedings.
2
Pick the Customer Type — Does LPCDA Apply?
Select Limited Company, Partnership / LLP, Sole Trader (acting in the course of a business) — the LPCDA framework applies — or Individual / consumer — the LPCDA does not apply and the template switches to the Pre-Action Protocol for Debt Claims 2017 framework. Sole traders trading qualify as B2B for LPCDA purposes (in the United Kingdom this is the standard distinction).
3
Identify the Overdue Debt(s)
Enter invoice number, invoice date, original due date, supply description and outstanding amount in GBP. If multiple invoices are overdue, switch on the multi-invoice schedule (Expert) and complete the schedule rows — each row gets its own fixed-sum band (£40 / £70 / £100) automatically.
4
Set the Statutory Compensation Parameters (Free)
Pick which six-month period interest started running (1 Jan – 30 Jun or 1 Jul – 31 Dec) — that determines which reference date sets the BoE base rate. Override the BoE base rate if interest started pre-2026 (the default is 3.75%, the current rate as at June 2026). If your contract has a contractual interest rate, choose whether it constitutes a "substantial remedy" under s.8 LPCDA; if not, statutory interest applies.
5
Unlock Expert: Recovery Costs, Statutory Demand, Escalation
In Expert mode, add the LPCDR 2002 Reg 5B reasonable-recovery-costs clause with a breakdown of solicitor / agency / credit-control fees. For corporate debtors and debts > £750, add the Notice of Intention to Serve Statutory Demand. Pick the escalation route — CPR Pre-Action Conduct (B2B fallback), PAP for Debt Claims 2017 (B2C 30-day), corporate statutory demand or Money Claim Online (Form N1). Optionally invoke the Reporting on Payment Practices and Performance Regulations 2017 and Small Business Commissioner. Download as PDF and serve on the British customer by recorded delivery.

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Legal Considerations

UK late-payment recovery operates within a tight statutory framework combining the LPCDA 1998, the LPCDR 2002 / 2013, the Insolvency Act 1986 and the Civil Procedure Rules.

This template is for informational purposes only and does not constitute legal advice. Where the debt is disputed in good faith, where there is risk of cross-claim, or where the customer is potentially insolvent, consult a qualified UK debt-recovery solicitor.

Reviewed for England & Wales late-payment practice (June 2026)

The LPCDA 1998 — Statutory Entitlements

The Late Payment of Commercial Debts (Interest) Act 1998 was a landmark piece of British legislation in the late-payment-of-commercial-debts space, giving suppliers a statutory entitlement to interest at 8% above the Bank of England base rate on overdue commercial debts. The Late Payment of Commercial Debts Regulations 2002 added a fixed-sum compensation per qualifying debt (£40, £70 or £100 by debt size), and the Late Payment of Commercial Debts Regulations 2013 — implementing EU Directive 2011/7/EU — added a right to reasonable costs of recovery above the fixed sum. These three layers together can add hundreds or thousands of pounds to the headline debt, in the United Kingdom, on a single demand.

s.8 LPCDA — Contracting Out of Statutory Interest

Under section 8 of the LPCDA 1998, a contractual clause is void to the extent that it purports to exclude or vary the statutory right to interest, save where the contract provides a "substantial remedy" for late payment. In Department for the Environment, Food and Rural Affairs v ASDA Stores Ltd [2003] EWHC 2436 (TCC), the British court held that a contractual rate at or near the supplier's cost of capital is not a substantial remedy and the clause is void. The template's s.8 rebuttal clause asserts this where the customer's standard terms purport a below-statutory rate. The 2026 UK Government Response to the Late Payment Consultation (Mayer Brown, 24 March 2026) signals an intention to make the 8% above BoE rate mandatory — removing the substantial-remedy carve-out — but implementing legislation is not yet enacted.

Pre-Action Protocols — B2B vs B2C

The Pre-Action Protocol for Debt Claims (1 October 2017) applies in the United Kingdom to B2C debt claims — that is, where a business is claiming a debt from an individual (including sole traders trading in a personal capacity for non-business reasons). It mandates a 30-day reply form and financial statement, an optional debt-advice extension and StepChange / Citizens Advice referrals. For B2B debts, the PAP for Debt Claims does NOT apply — the general CPR Practice Direction — Pre-Action Conduct & Protocols applies, requiring a reasonable opportunity to respond (typically 14-30 days). Non-compliance with the relevant Pre-Action regime can lead to UK costs sanctions under CPR PD — Pre-Action Conduct paragraph 13.

Insolvency Act 1986 — Statutory Demand

For corporate British debtors, an undisputed debt > £750 founds a statutory demand under Insolvency Act 1986 s.123(1)(a). If not paid within 21 days, the supplier can present a winding-up petition. For individual debtors, the threshold is £5,000 under s.267(4) and the route is bankruptcy. Statutory demand is a powerful UK debt-recovery tool but must NOT be used where the debt is disputed in good faith — that risks an abuse-of-process injunction and an adverse costs order. Use the statutory-demand warning in this template only where the debt is undisputed.

Frequently Asked Questions

Draft Your UK Late Payment Demand Now

Use our free LPCDA 1998 template to demand statutory interest at 11.75% per annum, fixed sum (£40 / £70 / £100 per invoice) and reasonable recovery costs in a single PDF. Auto-switches between B2B and B2C frameworks. Covers Pre-Action Protocol, statutory demand and Money Claim Online escalation routes — the complete UK late-payment recovery toolkit.

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