Late Payment Interest Calculator
The statutory interest and fixed compensation you are legally entitled to add to an overdue business invoice in the UK, calculated to the day.
- Free, no sign-up
- Runs in your browser, nothing is stored
- 2026/27 rates, reviewed 2nd September 2026
Late Payment Interest Calculator
Enter your figures to see results.
How much interest can I charge on a late invoice?
If another business pays you late and your contract says nothing about interest, the Late Payment of Commercial Debts Act lets you charge 8% a year above the Bank of England base rate, currently 11.75% in total, from the day after the due date. You can also add a fixed compensation fee of £40, £70 or £100 depending on the size of the debt. A £4,800 invoice paid 93 days late earns £143.70 of interest plus £70 compensation, and you do not need the customer's agreement to claim it.
How to use this calculator
- Enter the invoice amount (including VAT) and the date payment was due. If no date was agreed, it is 30 days after the invoice or delivery, whichever is later.
- Enter the date it was paid, or leave it blank to calculate up to today.
- Leave the statutory rate selected unless your contract sets its own interest rate, in which case enter that instead.
What your result means
How to read the figure, what counts as normal, and what to do about it.
Your rights when a business pays late
The Late Payment of Commercial Debts (Interest) Act 1998 applies to contracts between businesses (including sole traders and public bodies) for goods or services. It gives you three things automatically, without any clause in your terms:
- Statutory interest at 8% a year above the Bank of England base rate, running from the day after the due date until payment.
- Fixed compensation per invoice: £40 for debts under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more.
- Reasonable recovery costs beyond the fixed sum, such as a debt collection agency fee, if they exceed it.
You can claim for invoices up to six years old, including ones already paid late, though in practice most businesses use the Act as leverage on current debts. It does not apply to consumers, where interest depends on your terms and consumer credit rules.
Rates and fees used
| Item | Value |
|---|---|
| Bank of England base rate (reference rate for 1 July to 31 December 2026) | 3.75% |
| Statutory uplift | 8% |
| Statutory interest rate | 11.75% a year |
| Compensation, debt under £1,000 | £40 |
| Compensation, debt £1,000 to £9,999.99 | £70 |
| Compensation, debt £10,000 and over | £100 |
The reference rate is the base rate in force on 30 June (for debts falling due 1 July to 31 December) or 31 December (for 1 January to 30 June). Interest is simple, not compounded.
How to actually get paid
- Remind, then state your rights. A polite reminder on the due date; a second one a week later that quotes the interest and compensation now accruing. Many customers pay at this point.
- Issue an interest invoice. Use the figures from this calculator. Interest and compensation are outside the scope of VAT.
- Letter before action. State the debt, interest and compensation, and give 14 days before court proceedings. Templates are free online; the letter itself often works.
- Money Claim Online. For debts under £10,000 the small claims track is designed for businesses without solicitors. Fees start at £35 and are added to the claim.
Charging interest rarely damages a good relationship: a customer who values you pays on time. It does discourage the customers who treat your business as a free overdraft.
Worked example: a design agency's overdue invoice
An invoice for £4,800 was due on 1 June 2026 and is paid on 2 September 2026: 93 days late. The contract says nothing about interest.
Statutory rate: 8% + 3.75% = 11.75%.
Interest: 4,800 × 11.75% ÷ 365 × 93 = £143.70. Compensation for a debt between £1,000 and £9,999.99: £70.
The agency can invoice £213.70 on top of the £4,800, and the debt accrues a further £1.55 for every additional day.
Frequently asked questions
Can I charge late payment interest if my contract does not mention it?
Yes. Between businesses the statutory right applies automatically. Your terms can only replace it with a different remedy if that remedy is itself substantial; a clause saying "no interest is payable" is not enforceable.
When does an invoice become late if no date was agreed?
Thirty days after the customer receives the invoice or you deliver the goods or service, whichever is later. Public authorities must pay within 30 days regardless of terms.
Is late payment interest subject to VAT?
No. Interest and compensation are outside the scope of VAT, so the interest invoice carries no VAT.
Can I claim interest on invoices already paid late?
Yes, for up to six years, though the customer may resist and you would need to be prepared to pursue it. It is most useful as leverage while the debt is still outstanding.
Does this apply to a customer who is a consumer?
No. For consumers you can only charge interest if your terms say so, the rate must be reasonable, and the Consumer Credit Act may apply if you are offering credit.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The formula
Days overdue = Date paid (or today) − Due date Rate = 8% + Bank of England base rate on the reference date (or contractual rate) Interest = Amount × Rate ÷ 365 × Days overdue Total owed = Amount + Interest + Fixed compensation
Assumptions and limits
- The debt is between businesses (or a business and a public authority) and the statutory scheme has not been replaced by a substantial contractual remedy for late payment.
- Interest is calculated on the gross invoice amount, including VAT, on a simple daily basis.
- The base rate shown is the reference rate for the current six-month period; it is stored with the plugin's other rates and updated when the Bank of England changes it.
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