What do late payers cost you?
Customers who pay late or never cost more than the invoice itself: time chasing, interest on your overdraft and VAT you may already have paid to HMRC. See your own figure, and what UK law lets you claim from business customers.
2026/27 tax year
Choose your trade
- painter and decoratorSee what late payments cost you in 2 minutes
- carpenterSee what late payments cost you in 2 minutes
- electricianSee what late payments cost you in 2 minutes
- plumberSee what late payments cost you in 2 minutes
- bricklayerSee what late payments cost you in 2 minutes
- rooferSee what late payments cost you in 2 minutes
What you can claim when a customer pays late
The rules are different for homeowners (consumers) and business customers. Figures checked in October 2026. A Commercial Payments Bill with a 60-day cap on payment terms is going through Parliament but is not law yet.
Interest
HomeownerNo statutory interest. You can only charge interest if your written terms say so and the customer agreed to them, and the rate must be fair.
Business customerStatutory interest of 8% plus the Bank of England base rate: 11.75% a year from 1 July to 31 December 2026 (base rate 3.75% on 30 June). A contract can set its own rate, but it must be a substantial remedy.
When is a payment late?
HomeownerOn the due date in your terms. Agree it before you start, ideally on the quote.
Business customerOn the agreed date; without one, 30 days after the invoice or the work, whichever is later. Agreed terms should usually be no more than 60 days, and 30 days for public bodies.
Fixed compensation
HomeownerNo. It only applies between businesses.
Business customer£40 for a debt under £1,000, £70 up to £9,999.99 and £100 from £10,000, once per invoice, plus reasonable recovery costs above that.
Construction Act
HomeownerDoes not apply to work on a homeowner's own house, so stage payments have to be in your terms.
Business customerOn construction contracts you have the right to stage payments on jobs lasting 45 days or more, to payment notices and pay less notices, to suspend work after 7 days' written notice if you are not paid, and to adjudication.
VAT on bad debts
Under standard VAT accounting you pay the VAT on your next return even if the customer has not paid. Bad debt relief gives it back once the debt is 6 months overdue and written off in your accounts. On the cash accounting scheme you only pay VAT when you are paid.
How to get paid sooner
- Put your payment terms in the quotePayment terms (for example 7 days), interest and a deposit belong in the quote the customer accepts. Then there is nothing to argue about later, and the due date is set.
- Stage payments on bigger jobsSplit a job over a few thousand pounds into payments that follow the work, for example 30% at the start, 40% halfway and 30% at handover. You never have more than one stage owed at a time.
- Take a deposit for materialsIf you order materials for the customer, get them paid for before you order. Special-order items can rarely be returned.
- Invoice the same day and chase on timeAn invoice sent a week after handover gets paid a week later. Send a reminder the day after the due date and add statutory interest and the fixed sum on business invoices.
- Written quote and written variationsA dispute about the price is the classic reason customers hold back money. A quote and variations the customer has accepted in writing are your best evidence, also if you end up making a claim through Money Claim Online.
In Bidmio you send the quote with your payment terms, the customer accepts it online, and the quote becomes stage invoices and a final invoice without typing it all again.
Where do the numbers come from?
Every number in the check is either an official UK rate or an estimate that we label as one. Open a field to see why, with an example from real life.
Turnover a year
Everything you invoice in a year without VAT. The default per trade is Bidmio's estimate for a tradesperson working alone. Above £90,000 of taxable turnover in 12 months you must register for VAT.
Real life: A decorator turning over £75,000 a year who has 30% of it paid 25 days late has about £1,850 incl. VAT owed to them at any time.
Typical invoice
Used to count how many invoices are late, and to pick the fixed sum (£40, £70 or £100) for business customers. Bidmio's estimate per trade.
Real life: An electrician with lots of £900 jobs has many more invoices to chase than a roofer with a few £4,500 jobs, even at the same turnover.
Bidmio's estimate from typical figures. Change it to your own.
Share of business customers
Builders, letting agents, landlords' companies and facilities managers are business customers. Only they owe statutory interest and the fixed sum. Bidmio's estimate per trade.
Real life: A bricklayer working for a builder under CIS is owed statutory interest from the day the payment is late; a homeowner only owes it if your terms say so.
Share paid late
Invoices paid after the due date, by turnover. 30% is Bidmio's estimate; late payment is one of the most common complaints of small UK firms. Check your own accounts for the last 12 months.
Real life: Of ten invoices, three are paid after the due date: one a week late, one a month late and one only after a phone call.
Bidmio's estimate from typical figures. Change it to your own.
Days late
From the due date until the money is in your account, on average. Bidmio's estimate.
Real life: An invoice due in 14 days and paid after 39 days is 25 days late.
Bidmio's estimate from typical figures. Change it to your own.
Show 5 more explanations
Never paid
Bad debts as a share of turnover: customers who go bust, disappear or refuse to pay. 1.5% is Bidmio's estimate.
Real life: A main contractor goes into administration owing you £1,200. As an unsecured creditor you usually get little or nothing back.
Bidmio's estimate from typical figures. Change it to your own.
Hours chasing each invoice
Reminders, calls, texts, a statement, sometimes a visit, and the bookkeeping. Bidmio's estimate.
Real life: Three calls, two emails and a letter before action easily take an hour and a half, time you could have spent on paid work.
Bidmio's estimate from typical figures. Change it to your own.
Your hourly rate
What your hours are worth: the rate excl. VAT from the rate calculator. Hours spent chasing are hours you cannot bill.
Real life: 60 hours a year chasing payments at £44 an hour is over £2,600 of work nobody pays for.
Bidmio's estimate from typical figures. Change it to your own.
Overdraft interest
Money customers owe you is money missing from your account, often covered by the overdraft. 9% is Bidmio's estimate for a small business overdraft; Bank Rate is 3.75%.
Real life: £2,000 owed for a month at 9% costs £15. Small alone, but it adds up across the year.
Business type
A loss lowers your profit, so you pay less tax on it. A sole trader saves income tax and Class 4 NICs at the marginal rate; a limited company with profits under £50,000 saves 19% corporation tax.
Real life: A sole trader in the basic rate band who loses £1,000 to a bad debt pays about £260 less tax and NICs, so the real loss is about £740.
All sources
- GOV.UK: When to register for VAT (threshold £90,000)
- GOV.UK: Late commercial payments, interest and debt recovery (8% + base rate, £40 / £70 / £100)
- Bank of England: Bank Rate 3.75% (unchanged since 18 December 2025)
- GOV.UK: Income Tax rates and allowances 2026 to 2027 (Personal Allowance £12,570, rUK and Scottish bands, dividends)
- GOV.UK: Self-employed National Insurance rates 2026 to 2027 (Class 4 6% / 2%, Class 2)
- HMRC: Corporation Tax rates and allowances (19% / 25%, marginal relief 3/200)
2026/27 tax year
Rates change every tax year on 6 April, and some at the Budget. We update the figures once the new rates are published, but always check your own numbers with your accountant.
What is the statutory interest rate in 2026?
8% plus the Bank of England base rate (the reference rate) in force on 30 June for July to December and on 31 December for January to June. Bank Rate was 3.75% on 30 June 2026, so statutory interest is 11.75% a year for the second half of 2026. It only applies to debts between businesses.
Can I charge interest to a homeowner?
Only if your terms and conditions say so and the customer accepted them before the work. There is no statutory interest on consumer debts, so put a fair late payment clause in every quote.
When can I claim £40, £70 or £100?
When a business customer pays late. The amount depends on the size of the debt: £40 under £1,000, £70 from £1,000 to £9,999.99 and £100 from £10,000, once per invoice. It does not apply to homeowners.
Do I pay VAT on an invoice the customer never paid?
Under standard VAT accounting, yes: you pay it on the return for the period you invoiced. You can reclaim it with bad debt relief once the debt is more than 6 months overdue and written off in your accounts. On the cash accounting scheme you only pay VAT on money you have received.
Where do the figures in the example come from?
Turnover, invoice size, the share of late payers, bad debts and time are Bidmio's estimates for a tradesperson working alone. The interest rate and the fixed sums are from the Late Payment of Commercial Debts (Interest) Act 1998, GOV.UK and the Bank of England.
Do you store my numbers?
No. Everything is calculated in your browser and nothing is sent to a server. The share link only contains turnover, invoice size, the share of late payers, days late and the share of business customers.
Disclaimer
All calculations are a guide only and may contain errors. Bidmio gives no guarantee for the result, and the calculation is not tax, accounting or legal advice. The figures show what it takes to run a healthy, profitable business on the assumptions you entered and typical UK rates for 2026/27. Your own situation may differ, so always check the figures with your accountant before making decisions.