Late payment interest calculator

How statutory interest is worked out

Add 8 percentage points to the base rate, turn the yearly rate into a daily amount, then multiply by the days late:

Daily interest = amount owed × (8% + base rate) ÷ 365

Interest owed = daily interest × days late

The Late Payment of Commercial Debts (Interest) Act 1998 gives simple interest, so you charge it on the debt only, never on interest already added. Days late run from the due date: an invoice due on 31 July and paid on 14 September is 45 days late.

On top of the interest you can claim a fixed sum towards your recovery costs, once for each late payment:

If your reasonable recovery costs are higher than the fixed sum, the Act lets you claim the difference too.

Which base rate to use

Each debt's rate is fixed when interest starts to run, the day after the payment was due. The orders that set it (one for Scotland, one for the rest of the UK) use the base rate in force on 30 June for interest starting from 1 July to 31 December, and the rate on 31 December for interest starting from 1 January to 30 June. From the Bank of England's rate history:

The Bank of England calls it Bank Rate, and on 17 September 2026 held it at 3.75%. Interest starting from 1 January 2027 will use the rate in force on 31 December 2026, so check it then.

Worked example

A fictional 35-person print company supplied a retailer with display stands and invoiced £8,400 on the 30-day terms in their contract. The invoice was due on 31 July 2026. By 14 September it was 45 days overdue and still unpaid.

Interest started running on 1 August, so the reference date is 30 June 2026 and the base rate 3.75%. The statutory rate is 11.75%, which on £8,400 is £987 a year, or £2.70 a day. Over 45 days that's £121.68. The debt falls in the £1,000 to £9,999.99 band, so the fixed sum is £70.

The company sends a new invoice for £191.68, taking the total owed to £8,591.68, and tells the retailer that interest is still running at £2.70 a day. It also adds the account to the weekly overdue review in its cash flow forecast, so the next slow payer shows up early.

When you can claim

• Both sides must be acting as businesses. The Act counts public bodies as businesses, but not consumers.
• The payment must be overdue. Where no date was agreed, GOV.UK says it's late 30 days after the later of delivery and the customer getting your invoice. Agreed terms should usually be no more than 60 days between businesses, or 30 days when a public authority is paying.
• Your contract may set its own rate. GOV.UK says you can't claim statutory interest if the contract has a different interest rate.
• Claim it in writing. GOV.UK suggests a new invoice for the interest; add the fixed sum to it. The invoice template works for this.

The rules may change: in October 2026 the Commercial Payments Bill, covering payment terms and late payment interest, was going through Parliament. Check GOV.UK once it becomes law. This summarises the rules rather than giving legal advice.

Common mistakes

• Using today's base rate for an older debt. Use the rate from the reference date before interest started.
• Adding interest to interest. Statutory interest is simple.
• Counting from the invoice date instead of the due date.
• Adding the fixed sum to every reminder. GOV.UK says you can charge it only once for each payment.
• Mentioning interest only when you're angry. State it on invoices and apply it consistently, so it reads as policy, not a threat.