Late Payment Interest Calculator UK
Calculate statutory interest and compensation for overdue business invoices under UK law.
Late Payment Interest Calculator
Calculate statutory interest and compensation under UK law
Calculated per Late Payment of Commercial Debts (Interest) Act 1998. Bank of England base rate: 4.5%.
Your Legal Right to Late Payment Interest
Under the Late Payment of Commercial Debts (Interest) Act 1998, UK businesses have the legal right to charge interest and claim compensation when another business pays late. This applies to all B2B transactions where payment terms have been exceeded.
Current Statutory Rate (2026)
Fixed Compensation Amounts
In addition to interest, you can claim fixed compensation for each overdue invoice:
| Debt Amount | Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
How Late Payment Interest Works
Interest is calculated from the day after the payment due date until payment is received. The formula is:
Example Calculation
For a £5,000 invoice that is 30 days overdue at the current 12.5% rate:
- Daily rate: 12.5% ÷ 365 = 0.0342%
- Interest: £5,000 × 0.000342 × 30 = £51.37
- Compensation: £70 (debt between £1,000-£9,999)
- Total late payment charges: £121.37
Important Considerations
When Can You Claim?
- Interest accrues from the day after the payment due date
- You can claim even if you didn't include it in your contract
- The right cannot be excluded by contract terms
- You can claim on any B2B invoice, regardless of size
When It Doesn't Apply
- Consumer sales (B2C transactions)
- Public sector contracts may have different rules
- Disputed invoices (while dispute is genuine)
How to Claim Late Payment Interest
- Calculate the amount – Use our calculator above
- Notify the debtor – Send a formal letter or email stating the interest and compensation due
- Include in chase emails – Reference the Late Payment Act and the amounts owed
- Add to invoice – You can issue an updated invoice including the late payment charges
Automate Late Payment Tracking
Experi automatically calculates late payment interest and compensation for your overdue invoices. Include the amounts in chase emails with one click.
Frequently Asked Questions
What is the statutory late payment interest rate in the UK?
The statutory late payment interest rate is 8% plus the Bank of England base rate. As of February 2026, with the base rate at 4.5%, the total rate is 12.5% per annum.
How much compensation can I claim for late payment?
Under UK law, you can claim fixed compensation: £40 for debts under £1,000, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more. This is per invoice, not per client.
Does late payment interest apply to consumers?
No, statutory late payment interest only applies to business-to-business (B2B) transactions. Different rules apply for consumer sales, and you generally cannot charge statutory interest to individual consumers.
Can a customer refuse to pay late payment interest?
The statutory right to claim interest cannot be excluded by contract terms. However, many businesses choose to waive interest to maintain good client relationships. It's your choice whether to enforce it.
Should I include late payment interest in my terms?
Yes, it's good practice to mention late payment charges in your payment terms, even though you have the statutory right regardless. This sets clear expectations and may encourage timely payment.