Guide
Late payment compensation: the £40, £70 and £100 fixed sums
Updated
The fixed sum is the part suppliers most often leave on the table. It is automatic once statutory interest starts running, it is per invoice, and on small debts it is usually worth more than the interest.
The three bands
| Amount of debt | Fixed sum you can charge |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
gov.uk publishes exactly these bands and adds that "you can only charge the business once for each payment" (gov.uk). The statute is in the same terms: section 5A(2) sets "for a debt less than £1000, the sum of £40; for a debt of £1000 or more, but less than £10,000, the sum of £70; for a debt of £10,000 or more, the sum of £100" (legislation.gov.uk).
You can claim more than the fixed sum
Section 5A(2A) goes further: "If the reasonable costs of the supplier in recovering the debt are not met by the fixed sum, the supplier shall also be entitled to a sum equivalent to the difference between the fixed sum and those costs." If you instructed a debt recovery agency or a solicitor and their reasonable charge came to £600, the fixed £100 does not cap you at £100. Put the extra in the box marked recovery costs in the calculator.
When it becomes claimable
- The debt is a qualifying commercial debt: business to business, or business to public authority, for goods or services supplied.
- The payment becomes late, which is the day after the relevant day. See when a payment is legally late.
- Statutory interest begins to run. Section 5A(1) attaches the fixed sum at that moment: "Once statutory interest begins to run in relation to a qualifying debt, the supplier shall be entitled to a fixed sum."
- Send a new invoice for the interest and the fixed sum. gov.uk's advice is direct: "Send a new invoice if you decide to add interest to the money you're owed."
Why it matters most on small invoices
On a £750 invoice 60 days late at the 2026 rate, statutory interest is £14.49 and the fixed sum is £40: the compensation is nearly three times the interest. On a £100,000 invoice the same fixed sum is £100 against £1,931.51 of interest. Small suppliers chasing small invoices are exactly the people the fixed sum was written for, and it is claimed per late payment, so a customer who is late on six invoices owes six fixed sums.
A contract term that tries to remove or water down the fixed sum is exposed to challenge: section 5A(4) and (5) apply the Unfair Contract Terms Act 1977 to terms about the section 5A sum, whether or not they are in written standard terms.