UK late payment interest calculator
Calculate statutory interest and fixed compensation on an overdue UK business invoice, then generate a demand letter. Free, with no email required.
your claim
Enter your invoice amount and due date to see the statutory interest and fixed compensation you can claim — plus a copy-ready demand letter.
This is a calculation tool, not legal advice. It applies the Late Payment of Commercial Debts (Interest) Act 1998 for business-to-business debts. Statutory interest and fixed compensation do not apply to consumer debts, and different rules can apply where a contract sets its own substantial remedy. Verify figures against GOV.UK before you send a formal demand.
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A calculator fixes one invoice. We build the system behind it — automatic reminders, statutory-interest tracking, a client payment portal, and accounting integrations (Xero, QuickBooks, Stripe, GoCardless) so overdue invoices chase themselves.
Rules and reference rates reviewed 22 September 2026. Sources: Bank of England, December 2025, June 2026, and Small Business Commissioner calculator guidance.
How late payment interest is calculated
When a UK business pays a commercial invoice late, the Late Payment of Commercial Debts (Interest) Act 1998 entitles the supplier to statutory interest and a fixed sum in compensation, even if the contract is silent on late payment. This calculator applies those rules to your figures and shows exactly how the number is built.
The claim has three parts:
- Statutory interest — 8% a year plus the Bank of England base rate, charged as simple daily interest on the unpaid debt from the day after it was due until it is paid.
- The reference base rate — fixed by when the debt became overdue: the base rate on the previous 31 December (for debts overdue January–June) or 30 June (July–December). It stays the same for the whole claim.
- Fixed compensation — a flat recovery-cost sum: £40 under £1,000, £70 up to £9,999.99, and £100 at £10,000 or more.
The tool adds these together into the total you can demand, and drafts a letter that cites the Act and itemises each line — the wording most small businesses struggle to phrase. Figures are indicative; confirm the applicable historical reference rate and the rules on GOV.UK and with the Small Business Commissioner before sending a formal demand.
Late payment interest — frequently asked questions
How much interest can I charge on a late invoice in the UK?
For qualifying business-to-business debts, statutory interest is 8% plus the applicable Bank of England reference rate. The reference rate for interest starting in either half of 2026 is 3.75%, giving 11.75% a year. Interest is simple, not compound, and runs from the day after payment was due until the invoice is paid. Include VAT in the original invoice amount where it was charged.
What is the fixed compensation for late payment?
On top of interest, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim a fixed sum for the cost of recovering the debt: £40 for a debt under £1,000, £70 for a debt of £1,000 to £9,999.99, and £100 for a debt of £10,000 or more. You can claim it once per invoice, and you can also recover reasonable additional recovery costs above that sum.
Which Bank of England base rate applies to my claim?
Use the first overdue day, which is the day after the due date. If that day is between 1 January and 30 June, use the base rate on the previous 31 December. If it is between 1 July and 31 December, use the rate on the preceding 30 June. That reference rate stays fixed for the claim. We pre-fill verified rates for reference dates from December 2020 to June 2026; other periods require you to enter a verified historical rate.
How is late payment interest calculated?
Multiply the invoice total including VAT by the statutory rate, divide by 365, then multiply by the days overdue. For example, £5,000 at 11.75% for 30 days produces £48.29 interest plus £70 fixed compensation. If the principal has already been paid, only the interest and compensation remain; no further interest is added after the payment date. An invoice paid on its due date attracts neither interest nor fixed compensation.
Can I use this for a late payment demand letter?
Yes. Once you enter the invoice amount and dates, the tool generates a copy-ready demand letter that cites the Late Payment of Commercial Debts (Interest) Act 1998, itemises the principal, statutory interest and fixed compensation, and states the total due. Add your business name, the client's name and the invoice number to personalise it, then paste it into your own letterhead or email.
Does statutory interest apply to consumer or overseas invoices?
Statutory interest and fixed compensation under the 1998 Act apply to commercial (business-to-business and public-sector) debts in the UK. They do not apply to consumer debts, and different rules can apply where your contract sets its own substantial contractual remedy for late payment, or where the debt is governed by another country's law. If in doubt, check GOV.UK or take legal advice before sending a formal demand.
Can I automate chasing late invoices instead of doing this each time?
Yes — that's what we build at Appycodes. A calculator handles one invoice; a system handles all of them. We build automated reminder sequences, statutory-interest tracking, client payment portals, and integrations with Xero, QuickBooks, Stripe and GoCardless so overdue invoices chase and reconcile themselves. Book a scoping call to talk it through.
Spend less time chasing invoices
We build invoice reminders, interest tracking, payment portals and accounting integrations. Discuss your workflow with the engineer who would build it.