Late payment interest calculator

If another business pays you late, the law lets you charge interest and a fixed sum for the trouble. Enter the invoice and the dates, and this works out what you can claim, with wording you can paste into a letter.

• Statutory interest now: 11.75% a year for debts that became late between 1 July to 31 December 2026.
• Bank of England base rate: 3.75%, in force since 18 December 2025. We last checked it on 3 November 2026.
• Typical large company: pays in 31 days on average, with 15% of invoices paid outside agreed terms. See who pays late.

How the calculation works

1. When the payment became late

If you agreed a payment date, the debt is late from the day after it. If you did not, it becomes late 30 days after the customer received your invoice, or after you delivered the goods or service if that was later (section 4 of the Act).

An agreed date cannot always stretch as far as the buyer likes. Where the buyer is a business, interest runs from the end of 60 days if the agreed date is later than that and is grossly unfair to the supplier. Where the buyer is a public authority, the limit is 30 days. GOV.UK sets out the rules.

2. The rate

Statutory interest is 8% a year over the Bank of England base rate. The base rate used is the one in force on a reference date, fixed in six month blocks (the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002):

• for a debt that becomes late between 1 January and 30 June, use the base rate on the previous 31 December;
• for a debt that becomes late between 1 July and 31 December, use the base rate on 30 June.

That rate then applies for as long as the debt stays unpaid, even if the base rate moves.

3. The interest

Interest is simple, worked out day by day: the amount owed, times the rate, divided by 365, times the number of days late. GOV.UK's worked example uses the same method.

4. Fixed compensation and recovery costs

Once interest starts to run you are also entitled to a fixed sum for each late debt (section 5A):

If your reasonable costs of recovering the debt are more than the fixed sum, you can claim the difference too.

Statutory interest rate by period

The rate that applies to a late debt depends on the half year in which it became late.

Base rates from the Bank of England's official Bank Rate history, last checked 3 November 2026. A debt that becomes late from 1 January 2027 will use the base rate in force on 31 December 2026.

Claiming it

Send the customer a new invoice or a letter adding the interest and compensation, as GOV.UK suggests. If they still do not pay, you can make a court claim for money. Construction businesses have extra rights to notices, suspension and adjudication under the Construction Act: see Construction Act payment rules explained.

What is changing

The government's response to its late payment consultation, Time to pay up, said it intends to make every commercial contract carry the right to statutory interest at 8% over base rate, so it can no longer be replaced by a lower contract rate, and to cap payment terms between businesses at 60 days. Those measures are in the Commercial Payments Bill, which passed the House of Lords in October 2026 and is now before the House of Commons. They are not law yet, and this calculator follows the rules in force today.

Questions

What is the statutory interest rate on late payments now?

For a debt that became late between 1 July to 31 December 2026, it is 11.75% a year: 8% plus the Bank of England base rate of 3.75% that was in force on 30 June 2026. The rate is fixed by the date the debt became late and does not change while it stays unpaid.

How do I work out the daily interest?

Multiply the amount owed by the statutory rate, then divide by 365. On a £5,000 invoice at 11.75%, that is £587.50 a year, or about £1.61 a day. The interest is simple interest, so it is not added to the debt to earn further interest.

Can I charge interest if the contract says nothing about it?

Yes. The Late Payment of Commercial Debts (Interest) Act 1998 writes the right to statutory interest into business to business contracts for goods and services. If the contract sets its own rate for late payment, that rate applies instead.

Can I claim compensation as well as interest?

Yes. Once interest starts to run you can add a fixed sum of £40 for a debt under £1,000, £70 for £1,000 up to £9,999.99, and £100 for £10,000 or more. If your reasonable costs of recovering the debt are higher, you can also claim the difference.

When does a payment become late if no date was agreed?

Thirty days after the customer received your invoice, or after you delivered the goods or provided the service if that was later.

Sources

• Late Payment of Commercial Debts (Interest) Act 1998, sections 1, 4 and 5A
• Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4
• GOV.UK: Late commercial payments, charging interest and debt recovery
• Bank of England: Official Bank Rate history

This calculator gives general information, not legal advice. It assumes the debt is between businesses, that the contract does not set its own rate of interest for late payment, and that nothing has been paid off the invoice. Take advice on a particular dispute.