Legislation guides

The law behind
your claim

Your entitlement to statutory interest and compensation on late public sector invoices is created by law, not negotiation. Here's what the legislation says, including the separate rules that apply in Scotland.

Your rights are created by statute

Late payment interest and compensation aren't negotiated — they're statutory entitlements. The guides below set out what you're owed, how it's calculated, and which payment rules apply to your public sector clients, including the separate framework that governs Scottish public bodies.

Foundation legislation

Late Payment of Commercial Debts (Interest) Act 1998

The Act that creates the right to claim. It entitles businesses to statutory interest at 8% above the Bank of England base rate on invoices paid late, plus fixed compensation of between £40 and £100 per invoice depending on the debt amount. This is the legal mechanism behind every claim LPA purchases.

Applies to all B2B commercial debts, including public sector invoices

Interest rate: 8% above Bank of England base rate

Fixed compensation: £40 (under £1,000), £70 (£1,000–£9,999), £100 (£10,000+)

Claims can go back six years from the date the interest became due

In force Read the guide

Public sector procurement

Public Contract Regulations 2015

The regulations that required public sector contracting authorities in England, Wales, and Northern Ireland to pay suppliers within 30 days of receiving a valid invoice. Superseded for new contracts from 24 February 2025 by the Procurement Act 2023, but still the governing legislation for invoices issued before that date.

Applied to England, Wales, and Northern Ireland

30-day payment obligation for public sector bodies

Still governs invoices issued before 24 February 2025

Superseded Read the guide

Current regime

Procurement Act 2023

The Act that replaced the Public Contract Regulations 2015 on 24 February 2025. It modernises and simplifies the public procurement framework, retains the 30-day payment obligation for suppliers, and extends protections to a wider range of contracts.

In force from 24 February 2025

Retains the 30-day payment obligation for suppliers

Applies to England, Wales, and Northern Ireland

Governs public sector contracts awarded from February 2025 onwards

Current Read the guide

Devolved framework

Late payment legislation in Scotland

Scotland operates under its own procurement framework and a shorter five-year prescription period for late payment claims. The Late Payment of Commercial Debts (Interest) Act 1998 applies in Scotland, but the time limit and governing procurement legislation differ from the rest of the UK. Businesses supplying Scottish public sector bodies should check the specific rules before a claim prescribes.

Five-year prescription period under the Prescription and Limitation (Scotland) Act 1973

Governed by the Public Contracts (Scotland) Regulations 2015 and Procurement Reform (Scotland) Act 2014

The Procurement Act 2023 does not apply to devolved Scottish authorities

Statutory interest and compensation entitlements are the same as elsewhere in the UK

Devolved Read the guide