How to Calculate Late Payment Interest in the UK
Understanding UK Late Payment Interest
When a business pays an invoice late, UK law entitles you to charge statutory interest. This is defined by the Late Payment of Commercial Debts (Interest) Act 1998.
The Current Rate
The statutory interest rate is 8% plus the Bank of England base rate. As of early 2026, with the base rate at 4.5%, the total statutory rate is 12.5% per annum.
How to Calculate
The formula is straightforward:
Daily interest = (Invoice amount × Annual rate) ÷ 365
For example, on a £1,000 invoice at 12.5%:
- Daily interest = (£1,000 × 0.125) ÷ 365 = £0.34 per day
- After 30 days: £10.27
- After 90 days: £30.82
Compensation Amounts
In addition to interest, you can claim a fixed compensation amount:
| Invoice Amount | Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000+ | £100 |
Using Invoify's Late Payment Calculator
Invoify automatically calculates statutory interest on overdue invoices. Simply mark an invoice as overdue and the calculator shows exactly what you're owed — interest plus compensation.