Late Payment Interest Calculator
Calculate the statutory interest and fixed compensation you can charge on an overdue business invoice.
Statutory late payment interest on a business-to-business debt is 8% a year above the Bank of England base rate. For invoices falling due between 1 July 2026 and 31 December 2026 the reference rate is 3.75%, set on 30 June 2026, so interest runs at 11.75%. Fixed compensation of £40, £70 or £100 per invoice can be added on top.
Interest and compensation due
£0.00
Enter the due date to start the clock
For your chasing letter
Statutory interest of £0.00 at 11.75% (8% above the Bank of England base rate of 3.75%) for 0 days, plus £0.00 compensation under the Late Payment of Commercial Debts (Interest) Act 1998. Total now due: £0.00.
Reference rates and statutory interest by period
The reference rate is the Bank of England base rate on 31 December (for debts falling due 1 January to 30 June) or 30 June (for 1 July to 31 December). Add 8% to get the statutory rate. The rate is fixed at the start of the overdue period and does not change if the debt runs into the next half-year. Fixed compensation is £40 for debts up to £999.99, £70 up to £9,999.99 and £100 above that.
| Debts overdue from | To | Rate set on | Base rate | Statutory rate |
|---|---|---|---|---|
| 1 July 2023 | 31 December 2023 | 30 June 2023 | 5% | 13% |
| 1 January 2024 | 30 June 2024 | 31 December 2023 | 5.25% | 13.25% |
| 1 July 2024 | 31 December 2024 | 30 June 2024 | 5.25% | 13.25% |
| 1 January 2025 | 30 June 2025 | 31 December 2024 | 4.75% | 12.75% |
| 1 July 2025 | 31 December 2025 | 30 June 2025 | 4.25% | 12.25% |
| 1 January 2026 | 30 June 2026 | 31 December 2025 | 3.75% | 11.75% |
| 1 July 2026 | 31 December 2026 | 30 June 2026 | 3.75% | 11.75% |
Source: GOV.UK: Late commercial payments: charging interest and debt recovery; Bank of England: Bank Rate history. Last updated .
Source: GOV.UK: Late commercial payments: charging interest and debt recovery; Bank of England: Bank Rate history. Last updated .
How to use the late payment interest
How is statutory interest calculated?
The Late Payment of Commercial Debts (Interest) Act 1998 lets a business charge another business 8% above the Bank of England base rate on an overdue invoice. The base rate used is the one in force on 31 December for debts falling due from 1 January to 30 June, and on 30 June for debts due from 1 July to 31 December. The formula is: debt × annual rate ÷ 365 × days late.
| Debts falling due | Base rate | Statutory rate |
|---|---|---|
| 1 January 2025 to 30 June 2025 | 4.75% | 12.75% |
| 1 July 2025 to 31 December 2025 | 4.25% | 12.25% |
| 1 January 2026 to 30 June 2026 | 3.75% | 11.75% |
| 1 July 2026 to 31 December 2026 | 3.75% | 11.75% |
What compensation can I add?
On top of interest you can claim a fixed sum for the cost of recovering each overdue invoice, with no need to prove what chasing it cost you. It is charged once per invoice, so ten overdue invoices from the same customer carry ten lots of compensation.
| Amount owed | Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
What does a £5,000 invoice paid 60 days late cost?
- Annual rate: 3.75% base + 8% = 11.75%
- Daily interest: £5,000 × 11.75% ÷ 365 = £1.6096
- Interest for 60 days: £96.58
- Compensation: £70
- Total you can add: £166.58
When can I charge it?
Interest runs from the day after the invoice falls due, and the calculator counts the days for you from the due date and the date paid. If you agreed payment terms, that is the agreed date; if you agreed nothing, the Act gives the customer 30 days from receiving the invoice or the goods, whichever is later. The right applies only to business customers, so you cannot charge statutory interest to a consumer. If your contract already sets its own interest rate and that rate is a substantial remedy, the contract rate applies instead.
Interest is a lever, not a first step. Our late payment guide sets out the reminder sequence and the letter before action, and the invoice generator lets you print the statutory interest wording on every invoice so customers know it is coming.
Frequently asked questions
- What is the late payment interest rate right now?
- For debts falling due between 1 July 2026 and 31 December 2026 it is 11.75%: the 3.75% base rate set on 30 June 2026 plus the 8% statutory margin. The rate is fixed for the whole period the debt falls in, even if the base rate changes afterwards.
- Can I charge late payment interest to an individual?
- Not under the 1998 Act, which only covers contracts between businesses or with public bodies. For a consumer you can only charge interest if your terms said so when they agreed to buy. In a county court claim you can ask for interest at the court’s rate instead.
- Do I need to tell the customer in advance?
- No. The right exists automatically once a business invoice is overdue, whether or not your invoice mentioned it. Saying on the invoice that you will claim statutory interest and compensation is still worth doing, because it reduces the number of late payers.
- Is the interest simple or compound?
- Simple. You calculate it on the original debt only, so it grows in a straight line by the same amount each day. The calculator shows the daily figure so you can update a demand letter without redoing the sum.
- Can I claim the costs of a debt collector or solicitor as well?
- Yes, if your reasonable recovery costs exceed the fixed compensation you can claim the difference, provided they are reasonable for the size of the debt. Keep the invoices from the collector or solicitor as evidence. A court will decide what is reasonable if the customer disputes it.
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Read next
- How to invoice as a sole traderA step by step guide to writing, numbering, sending and chasing invoices as a UK sole trader, with a worked example.
- How to chase late paymentsA tested sequence for chasing an overdue invoice, from the friendly reminder to statutory interest, a letter before action and small claims.
Cite this page: “Late Payment Interest Calculator”, SoleKit, https://solekit.co.uk/late-payment-interest-calculator