UK late payment interest calculator

What the law says, in plain English

When a business buys goods or services from another business on credit and pays late, the Late Payment of Commercial Debts (Interest) Act 1998 lets the supplier claim three things:

• Statutory interest at 8% a year above the Bank of England base rate (Bank Rate), as GOV.UK explains. It is simple interest, not compound.
• A fixed sum towards the cost of chasing the debt, set by section 5A of the Act: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more.
• Reasonable extra recovery costs where they are more than the fixed sum, for example a debt collection agency's fee (section 5A(2A)). This calculator doesn't add those, because they depend on what you actually spent.

The Act applies across England, Wales, Scotland and Northern Ireland. It covers business-to-business contracts, including sales to the public sector. It does not cover sales to consumers (members of the public). And if your contract already sets its own late-payment interest rate, GOV.UK says you can't claim statutory interest: you use the contract rate instead.

When does a payment become late?

If you and your customer agreed a payment date (for example “30 days from the invoice date”), the payment is late from the day after that date. Under section 4 of the Act, agreed terms between private businesses can be longer than 60 days only if that isn't grossly unfair to the supplier. For public authorities the usual limit is 30 days.

If you didn't agree a payment date, GOV.UK says the payment is late 30 days after the customer gets the invoice, or 30 days after you deliver the goods or provide the service if that is later. The Act counts that 30-day period as starting with the day the customer has the invoice, so the legal due date can be a day earlier than “invoice date + 30”. The calculator uses the later date, so it never asks for more than you're owed. If you want to use the earlier date, enter it as the due date.

Interest runs from the day after the due date until the day you're paid.

Which base rate counts: the reference date rule

The rate isn't the Bank Rate today. Under article 4 of the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 (and the matching Scottish Order, SSI 2002/336), it's 8% over the Bank Rate in force on a fixed reference date:

• if interest starts to run between 1 January and 30 June, use the Bank Rate on the 31 December before;
• if interest starts to run between 1 July and 31 December, use the Bank Rate on the 30 June before.

Once set, the rate stays the same for that debt, even if Bank Rate changes while it's unpaid. So an invoice that fell due on 31 August 2026 carries 11.75% a year (3.75% + 8%) for as long as it stays unpaid.

Reference rates used by this calculator

Source: Bank of England, Official Bank Rate history, checked 1 November 2026. Bank Rate has been 3.75% since 18 December 2025. The rate for interest starting from 1 January 2027 depends on Bank Rate on 31 December 2026, which isn't known yet. Until it is, the calculator uses 3.75% and tells you it's provisional.

How the calculation works

1. Annual interest = amount owed × statutory rate.
2. Daily interest = annual interest ÷ 365.
3. Interest so far = daily interest × number of days late.
4. Total claim = amount owed + interest + fixed sum.

GOV.UK's own example rounds the daily figure to the nearest penny before multiplying, so it can come out a few pence different from the exact figure. The calculator shows both.

Example 1 (example figures only)

An invoice for £1,000 was due on 15 January 2026 and paid on 6 March 2026: 50 days late. Interest started on 16 January 2026, so the reference date is 31 December 2025 (Bank Rate 3.75%) and the rate is 11.75%. Annual interest is £117.50, daily interest about 32p, so 50 days comes to £16.10. The debt is £1,000 or more, so the fixed sum is £70. Total claim: £1,086.10.

Example 2 (example figures only)

An invoice for £2,400 dated 1 August 2026 on 30-day terms was due on 31 August 2026 and is still unpaid on 1 November 2026: 62 days late. Interest started on 1 September 2026, so the reference date is 30 June 2026 (Bank Rate 3.75%) and the rate is 11.75%. Interest is £2,400 × 11.75% ÷ 365 × 62 = £47.90, plus the £70 fixed sum. Total claim: £2,517.90.

Example 3 (example figures only)

An invoice for £850 was due on 30 June 2025 and paid on 30 September 2025: 92 days late. Interest started on 1 July 2025, so the reference date is 30 June 2025, when Bank Rate was 4.25%. The rate is 12.25% and the interest is £26.25. The debt is under £1,000, so the fixed sum is £40.

How to claim it

You don't need a court to ask for statutory interest. It's an implied term of the contract. In practice:

1. Check the customer is a business, the invoice is genuinely overdue and nothing is in dispute.
2. Check your contract or terms don't set their own late-payment interest rate.
3. Send a reminder. Many late payments are oversights, and a polite first email often works.
4. If it's still unpaid, send a new invoice or statement that shows the original amount, days late, rate, interest and fixed sum. GOV.UK suggests a new invoice if you add interest.
5. Keep a record of every reminder. If you're still not paid, GOV.UK's guide to making a court claim for money explains the next step in England and Wales. Scotland and Northern Ireland have their own procedures.

Whether to claim interest is up to you. Some businesses waive it for a good customer who pays straight after a reminder. Being able to show the figure is still useful.

Rule changes on the way

The Commercial Payments Bill would change parts of this law, including stopping contracts from excluding or varying the right to statutory interest. It's still going through Parliament and isn't law yet, so this calculator uses the current rules. The government has said most measures would come into force in late 2027 or early 2028, subject to Parliament.

FAQ

What is the statutory interest rate on late payments in the UK?

It is 8% a year plus the Bank of England base rate (Bank Rate) in force on the reference date. For interest that started to run between 1 July and 31 December 2026, the reference date is 30 June 2026, when Bank Rate was 3.75%, so the rate is 11.75% a year.

How do I calculate interest on a late invoice?

Multiply the amount owed by the statutory rate to get a year's interest, divide by 365 to get the daily interest, then multiply by the number of days the payment is late. For example, £1,000 at 11.75% is £117.50 a year, about 32p a day, so 50 days late is about £16.10.

How much is the fixed sum for late payment?

£40 if the debt is under £1,000, £70 if it is £1,000 to £9,999.99 and £100 if it is £10,000 or more. You can claim it once for each late invoice, on top of the interest.

Can I charge late payment interest to a consumer?

Not under the Late Payment of Commercial Debts (Interest) Act 1998. It only covers debts between businesses (including the public sector) for goods and services. For a customer who is a member of the public, only what your contract with them says applies.

Which Bank of England rate do I use?

The rate in force on 31 December for interest that starts to run between 1 January and 30 June, or on 30 June for interest that starts between 1 July and 31 December. That rate then stays fixed for that debt, even if Bank Rate changes later.

When does a payment become late if we didn't agree a date?

GOV.UK says the payment is late 30 days after the customer gets the invoice, or after you deliver the goods or provide the service if that is later.

Can I claim statutory interest if my contract has its own late payment clause?

Not if your contract already sets a different late-payment interest rate. GOV.UK says you can't claim statutory interest where the contract has its own rate, so use the contract rate instead.

Do I need to send a new invoice to claim interest?

GOV.UK suggests sending a new invoice if you decide to add interest to what you're owed. Show the original invoice, the days late, the rate, the interest and the fixed sum so your customer can check the figures.

Official sources

• Late Payment of Commercial Debts (Interest) Act 1998 (legislation.gov.uk), including section 4 (when interest runs) and section 5A (fixed sum)
• Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (England, Wales and Northern Ireland)
• Late Payment of Commercial Debts (Rate of Interest) (Scotland) Order 2002, article 4
• GOV.UK: Late commercial payments: charging interest and debt recovery
• Bank of England: Official Bank Rate history

Checked 1 November 2026. Laws, guidance and rates change, so check the sources above. This page is general information, not legal advice. For a large or disputed debt, get advice, for example from Citizens Advice, a solicitor or your trade body. Built with help from AI tools and checked against the official sources listed.