Late Payment Interest Calculator for UK invoices
Invoice details
The date the invoice should have been paid
Date of payment, or today for an ongoing claim
Printed on the debit note as the referenced invoice
See exactly what you can claim
Enter the unpaid amount and the due date — the statutory interest and fixed compensation appear instantly.
- Statutory interestBank of England base rate + 8% per year (12.5% today)
- Fixed compensation£40 – £100 per invoice, on top of the interest
- Legal basisLate Payment of Commercial Debts (Interest) Act 1998
How late payment interest is calculated in the UK
UK statutory late payment interest is the Bank of England base rate plus 8%, applied daily to the unpaid amount. The formula is: (debt × annual rate ÷ 100) × (days overdue ÷ 365).
The formula, step by step
Say a customer owes you £2,500 and the invoice is 45 days overdue. With the base rate at 4.5%, the statutory rate is 12.5% per year:
Which Bank of England base rate applies?
For statutory interest, the reference base rate is fixed twice a year: the rate in force on 31 December applies to debts becoming overdue from 1 January to 30 June, and the rate on 30 June applies from 1 July to 31 December. That's why the calculator lets you adjust the base rate — use the one that was in force when your invoice became overdue.
Fixed compensation: what you can add on top
On top of the interest, the Act gives you a fixed sum per overdue invoice to cover recovery costs — no receipts or proof required.
| Unpaid debt | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 – £9,999.99 | £70 |
| £10,000 or more | £100 |
If your reasonable recovery costs are higher than the fixed sum — for example debt collection or legal fees — you can also claim the difference. Pair this with automatic payment reminders to chase invoices before they ever get this far.
Your legal right: the Late Payment of Commercial Debts (Interest) Act 1998
Statutory interest is a legal right for UK businesses, not a courtesy. It applies automatically to business-to-business contracts — you do not need an interest clause in your contract or on your invoice.
- B2B only. The Act covers commercial debts between businesses. Consumer invoices need a contractual interest clause instead.
- It cannot be contracted away. A contract can only replace statutory interest if it provides a "substantial remedy" for late payment in its place.
- Interest and compensation are exempt from VAT. You claim them without adding VAT on top.
- Claim in writing. The usual route is a debit note or formal letter itemising the debt, days overdue, interest, daily rate, and compensation — exactly what the button above generates for you.
Read the full text on legislation.gov.uk, or see our complete guide to calculating late payment interest for worked examples and template wording. Invoify can also track overdue invoices and calculate this automatically as part of your invoicing.
Late payment interest: frequently asked questions
The statutory late payment interest rate is the Bank of England base rate plus 8%. With the base rate at 4.5%, that makes 12.5% per year, applied daily to the unpaid amount. The reference base rate is fixed twice a year — on 31 December and 30 June — for the following six months.
Statutory interest applies to business-to-business (B2B) commercial debts only. If your customer is a consumer, the Act does not apply — you would need an interest clause in your contract instead.
You can claim a fixed sum per overdue invoice on top of the interest: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more. If your recovery costs exceed the fixed sum, you can also claim the reasonable difference.
No. The Late Payment of Commercial Debts (Interest) Act 1998 applies automatically to B2B contracts in the UK. It cannot be excluded by contract unless the contract provides a "substantial remedy" for late payment in its place.
No. Statutory interest and fixed compensation are outside the scope of VAT — you charge them without adding VAT, and they are shown as exempt on the claim document.
Interest runs from the day after the agreed due date. If no payment terms were agreed, the law sets a default period: interest starts 30 days after the customer received the invoice or the goods/services, whichever is later.
Put the claim in writing: issue a debit note (or a formal letter) itemising the original invoice number, the unpaid amount, the days overdue, the interest, the daily rate, and the fixed compensation. This calculator can generate that debit note for you with everything pre-filled.
Stop chasing late payments manually
Invoify tracks overdue invoices, sends automatic reminders, and calculates statutory interest for you — built for UK freelancers and small businesses.