Free tool · Calculators
Late payment interest calculator
Work out the statutory interest and fixed compensation you can add to a late invoice under the Late Payment of Commercial Debts (Interest) Act 1998. For UK business-to-business debts. Add one invoice or several.
Reference rates used (last checked 13 October 2026)
| Payment became overdue | Reference rate | Statutory rate |
|---|---|---|
| 1 July – 31 December 2026 | 3.75% | 11.75% |
| 1 January – 30 June 2026 | 3.75% | 11.75% |
| 1 July – 31 December 2025 | 4.25% | 12.25% |
| 1 January – 30 June 2025 | 4.75% | 12.75% |
| 1 July – 31 December 2024 | 5.25% | 13.25% |
| 1 January – 30 June 2024 | 5.25% | 13.25% |
| 1 July – 31 December 2023 | 5.00% | 13.00% |
| 1 January – 30 June 2023 | 3.50% | 11.50% |
| 1 July – 31 December 2022 | 1.25% | 9.25% |
| 1 January – 30 June 2022 | 0.25% | 8.25% |
| 1 July – 31 December 2021 | 0.10% | 8.10% |
| 1 January – 30 June 2021 | 0.10% | 8.10% |
| 1 July – 31 December 2020 | 0.10% | 8.10% |
| 1 January – 30 June 2020 | 0.75% | 8.75% |
| 1 July – 31 December 2019 | 0.75% | 8.75% |
| 1 January – 30 June 2019 | 0.75% | 8.75% |
| 1 July – 31 December 2018 | 0.50% | 8.50% |
| 1 January – 30 June 2018 | 0.50% | 8.50% |
Source: Bank of England Bank Rate history. The reference rate is Bank Rate at close of business on 31 December or 30 June before each period.
What the law lets you claim
When another business pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 lets you add two things to the debt: statutory interest and a fixed sum towards the cost of chasing it. You don't need a clause in your contract for this. The right comes from the Act, as amended by the Late Payment of Commercial Debts Regulations 2002 and 2013. It applies across the UK, but only between businesses. It doesn't cover sales to consumers.
How statutory interest is worked out
Statutory interest is 8% a year plus the Bank of England's reference rate. The reference rate is not today's base rate. It's the Bank Rate in force on 31 December (for debts that became overdue between January and June) or 30 June (for debts that became overdue between July and December). Once a debt is overdue, its rate is fixed. Later changes to Bank Rate don't affect it.
Interest is simple, not compound, and runs daily from the day after payment was due until the day it's paid: amount × rate × days late ÷ 365. For example, £1,000 that fell overdue in September 2026 carries 11.75% (8% plus the 3.75% Bank Rate on 30 June 2026). That's about 32p a day, or £13.84 after 43 days.
Fixed compensation
- £40 for a debt of less than £1,000.
- £70 for a debt of £1,000 to £9,999.99.
- £100 for a debt of £10,000 or more.
You can claim this once for each invoice paid late. If chasing the debt costs you more, for example in debt collection or legal fees, you can also claim reasonable recovery costs above the fixed sum.
When a payment counts as late
If you agreed a payment date, the payment is late the day after it. Between businesses, agreed terms should normally be no more than 60 days. Longer terms are allowed only if they're not grossly unfair to the supplier. If you didn't agree a date, the law treats payment as due 30 days after the later of the customer receiving your invoice and receiving the goods or services. Use the invoice date and terms option above if you only know when you invoiced.
When the statutory rate doesn't apply
If your contract sets its own interest rate for late payment, that rate normally applies instead. A contract can't fob you off with a token rate, though. If the contractual remedy isn't a 'substantial remedy', the statutory rate can apply instead. Public authorities can't impose a lower rate on their suppliers. If your contract has a rate, use that instead of this calculator.
How to claim
- Send the customer a new invoice or a letter adding the interest and compensation, stating that you're claiming under the Late Payment of Commercial Debts (Interest) Act 1998. Show the calculation.
- Keep a record of the original invoice, the agreed terms, when it was delivered and every reminder you've sent.
- If the debt is still unpaid, send a formal letter before action giving a final deadline.
- As a last resort, you can make a court claim. In England and Wales, claims up to £10,000 usually go through the small claims track, and you can file online with Money Claim Online. Scotland and Northern Ireland have their own procedures.
Many businesses use the right to claim as leverage and waive it if the customer pays promptly. That's your call. Weigh it against the relationship.
Changes on the way
The government has proposed further late payment reforms, including a maximum 60-day payment term for larger businesses paying smaller suppliers and making statutory interest mandatory. As of October 2026 these are still going through Parliament and aren't yet law. This calculator uses the rules currently in force, and we'll update it if they change.
This calculator gives an estimate to help you prepare a claim. It isn't legal advice. If a large sum is at stake or the customer disputes the debt, speak to a solicitor or your accountant.
Frequently asked questions
How much interest can I charge on a late invoice in the UK?
Between businesses, you can charge statutory interest of 8% a year plus the Bank of England reference rate, unless your contract sets a different rate. For debts that became overdue between 1 July and 31 December 2026 the reference rate is 3.75%, so statutory interest is 11.75% a year, charged daily as simple interest.
What is the Bank of England reference rate for late payment interest?
It's the Bank Rate in force at close of business on 31 December or 30 June. Debts that become overdue between January and June use the 31 December rate, and debts that become overdue between July and December use the 30 June rate. The rate stays fixed for that debt even if Bank Rate changes later.
Can I charge late payment interest to a consumer?
Not under the Late Payment of Commercial Debts Act. It only applies when both sides are acting in the course of business. For consumers, you can only charge interest if your contract allows it, and consumer protection rules apply.
Can I claim the £40, £70 or £100 compensation on every invoice?
Yes. The fixed sum is per invoice paid late, based on the size of that invoice: £40 for less than £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. You can also claim reasonable recovery costs above that if they're higher.
When is an invoice legally overdue if no payment terms were agreed?
30 days after the customer received the invoice, or 30 days after they received the goods or services if that was later. Interest starts the day after that.
Can I still claim interest if the invoice has now been paid?
Yes. You can claim statutory interest and compensation for the period it was late even after the debt itself has been paid. Enter the date it was paid and the calculator works out the interest up to that day.
Does my contract's interest rate override the statutory rate?
Usually, yes. If your contract sets a rate for late payment, that rate applies instead, as long as it's a substantial remedy. A token rate that doesn't fairly compensate you can be overridden, so the statutory rate applies.
Check before you pay — every time
Paylist is a verified directory of UK business bank details. Your suppliers list theirs once, and you look them up instead of trusting an email.