Total Amount Now Owed
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Invoice Late Payment Interest Calculator
Calculate the statutory interest and fixed compensation you are legally entitled to charge on overdue UK business invoices. Based on the Late Payment of Commercial Debts Act — enter your invoice details and get the exact amount owed instantly.
Tip! — The statutory rate is the Bank of England base rate plus 8%. Interest accrues daily from the day after the payment due date. Fixed compensation is payable per invoice, on top of interest.
| Invoice Amount (£) | |
| Invoice Date | |
| Payment Terms (days) | |
| Date Interest Calculated To | |
| Interest Rate Basis | |
| Bank of England Base Rate (%) | |
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Base rate as of April 2025: 4.25% — giving a statutory rate of 12.25%. Update if the rate has changed. |
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Late Payment Breakdown
| Item | Amount |
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| Run calculation to see your breakdown | |
GUIDE
Invoice Late Payment Interest Guide
How to charge statutory interest correctly, what to include on your invoices, how to write a late payment letter, and what to do if a client still refuses to pay.
Read Guide →How to Use the Late Payment Interest Calculator
Step-by-Step
- Enter the invoice amount — the original outstanding balance excluding any VAT you have already collected. Interest is calculated on the net debt owed.
- Enter the invoice date — used alongside your payment terms to determine the exact date payment became overdue.
- Select your payment terms — choose 14, 30, or 60 days, or enter a custom figure. If no terms were agreed, 30 days is the statutory default under the Late Payment Act.
- Set the date to calculate interest to — today's date is set automatically. Change this to a future date to estimate interest if payment is still outstanding, or to the actual payment date to calculate what was owed at settlement.
- Choose the interest rate basis — statutory (Bank of England base rate + 8%) applies to most B2B invoices. Select Custom if your contract specifies a different rate.
- Confirm the Bank of England base rate — pre-filled at the April 2025 rate of 4.25%. Update this if the rate has changed since your invoice was issued.
- Click Calculate Interest to see the total now owed: original invoice, accrued daily interest, fixed statutory compensation, and the grand total to include on a chaser or claim.
Late Payment Interest in the UK: What You Are Legally Owed
Late payment is one of the most damaging problems facing UK small businesses. According to the Federation of Small Businesses, late payment causes tens of thousands of business failures each year. The law gives you a clear right to charge interest and compensation — most business owners simply do not use it.
The Late Payment of Commercial Debts Act 1998
The Late Payment of Commercial Debts (Interest) Act 1998 gives every UK business the automatic right to charge interest on overdue B2B invoices. You do not need to include a late payment clause in your contract — the right exists by statute. The Act applies to any commercial transaction where both the supplier and the purchaser are acting in the course of a business. It does not apply to consumer transactions.
The statutory interest rate is the Bank of England base rate plus 8 percentage points, set at the start of each six-month reference period. As of April 2025, with the base rate at 4.25%, the statutory rate is 12.25% per year — significantly higher than typical commercial lending rates, which is deliberate. The rate is designed to be punitive enough to incentivise prompt payment.
How Interest Accrues Day by Day
Interest begins to accrue from the day after the payment due date — not from the invoice date. If your invoice is dated 1 March with 30-day terms, the due date is 31 March and interest starts on 1 April. The daily interest rate is the annual statutory rate divided by 365. On a £5,000 invoice at 12.25%, that is approximately £1.68 per day. Over 90 days of late payment, the interest alone reaches around £151. It compounds quickly on larger invoices or longer delays.
Fixed Statutory Compensation
On top of interest, the Act entitles you to a fixed compensation amount for the cost of recovering the debt. This is charged per invoice, automatically, and does not require you to prove any actual costs incurred. The amounts are: £40 for invoices under £1,000; £70 for invoices between £1,000 and £9,999.99; £100 for invoices of £10,000 or more. For businesses dealing with habitual late payers across multiple invoices, these amounts can add up to a significant recovery.
Contractual Rates vs Statutory Rates
If your contract or invoice terms specify a late payment interest rate, that contractual rate takes precedence over the statutory rate — provided it is not substantially below the statutory rate and therefore unfair. If a contractual rate is deemed to be a "substantial remedy" under the Act, it replaces the statutory entitlement. If it is not, HMRC and the courts can disregard it and apply the statutory rate instead. When in doubt, using the statutory rate or higher is the safest approach. See our payment fees guide for more on managing the cost of getting paid.
What Payment Terms Should You Use?
The statutory default is 30 days, but you can agree different terms with your clients — subject to the terms being fair and not unconscionable. Many freelancers and small businesses use 14-day terms to improve cash flow, particularly for smaller invoices. Larger businesses often attempt to push for 60 or even 90 days, but for SMEs supplying to large corporates, maximum payment terms of 60 days apply in most B2B contracts under the Act. Whatever terms you use, state them clearly on every invoice and in your engagement letters. Use our Day Rate Calculator to ensure your pricing accounts for the true cost of capital tied up in unpaid invoices.
Frequently Asked Questions
How is late payment interest calculated on invoices in the UK?
UK statutory late payment interest uses the Bank of England base rate plus 8 percentage points. Interest accrues daily on the outstanding invoice amount from the day after the payment due date. At the current base rate of 4.25%, the statutory rate is 12.25% per year. Daily interest equals the invoice amount multiplied by the statutory rate divided by 365.
What is the statutory late payment rate in the UK?
The statutory rate is the Bank of England base rate plus 8%. With the base rate at 4.25% as of April 2025, the current statutory rate is 12.25% per year. The rate is reviewed at the start of each six-month reference period (1 January and 1 July) and fixed for that period based on the base rate in force at that time.
Can I charge late payment interest on any invoice?
The statutory right applies to business-to-business (B2B) transactions only. It does not cover consumer invoices. If your contract specifies a different interest rate, that contractual rate applies — provided it is not unfairly low. If no payment terms are agreed, the default payment period under the Act is 30 days from the later of the invoice date or delivery of goods or services.
What is the fixed compensation for a late payment?
The Late Payment Act entitles you to fixed compensation per overdue invoice, on top of interest: £40 for invoices under £1,000; £70 for invoices between £1,000 and £9,999.99; and £100 for invoices of £10,000 or more. This is automatic — you do not need to prove any costs incurred to claim it.
Do I need to include late payment terms on my invoice?
No — the statutory right exists regardless of whether you state it on your invoice. However, clearly displaying your payment terms and late payment policy on invoices and in contracts makes enforcement much easier and acts as a deterrent. Most clients will pay on time if they know interest is being tracked from the due date.
What is the default payment period if no terms are agreed?
If no payment terms are specified, the Act sets a default of 30 days for both public and private sector contracts. Interest begins accruing from day 31. For public sector contracts the 30-day limit is mandatory — it cannot be extended by contractual agreement.