Late payment interest calculator
Under the Late Payment of Commercial Debts (Interest) Act, you can usually claim interest at 8% plus the Bank of England base rate on overdue business invoices, plus a fixed compensation sum. Enter your figures to work it out.
Free late payment chaser letter
Copy this letter or email into your own message. It fills in the figures from the calculator above (change the amount, dates or rate and it updates until you edit the text), and you complete the square-bracket parts. Send it once a final reminder is overdue; keep a copy and proof of sending.
The rules in brief
GOV.UK explains that if another business is late paying you, you can claim interest and debt recovery costs. Unless you've agreed a different rate in your contract, statutory interest is 8% plus the Bank of England base rate, for business-to-business transactions. The reference base rate is fixed for six-month periods. You can't claim statutory interest if a different interest rate for late payment was agreed in the contract.
You can also charge a fixed sum for the cost of recovering the debt:
| Amount of debt | Fixed sum |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
How the calculation works
- Annual rate = 8% + reference base rate.
- Daily interest = amount × annual rate ÷ 365.
- Interest = daily interest × days late (from the day after the due date).
- Add the fixed compensation sum.
Example: £1,000 overdue for 45 days with a 4% base rate is 12% a year. That's £0.3288 a day, so £14.79 of interest, plus £70 compensation (because the debt is £1,000), making £84.79 in total.
When it applies
- Only to business-to-business debts. It doesn't apply to consumers (for example homeowners).
- From the agreed due date. If no date was agreed, GOV.UK explains that the default is 30 days after the customer receives the invoice or the goods or services, whichever is later.
- To sole traders as well as companies, on both sides.
Claiming it
Tell the customer in writing, showing the calculation, and send a revised statement. Many small businesses use the right as leverage in a final reminder rather than as a first step. Our late payment interest guide for subcontractors explains the steps in full. See also our chasing templates, which include wording for adding interest, and our payment terms guide.
Working out a CIS deduction too? Use the CIS calculator.
Frequently asked questions
What is the statutory late payment interest rate?
8% plus the Bank of England base rate in force on the relevant reference date (31 December or 30 June), for business-to-business debts.
Can I charge £40 on a small invoice?
Yes. Under the Act, a fixed sum of £40 applies to debts under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more.
Can I charge late payment interest to a homeowner?
Not under this Act, which covers business-to-business transactions only.
Which base rate should I use?
Strictly, the Bank of England base rate in force on 30 June if interest starts to run between 1 July and 31 December, or on 31 December if it starts between 1 January and 30 June. Interest starts the day after the due date. The calculator has a button that fills this in for recent due dates. For invoices that fell due in 2026 the rate is 3.75%: that was the base rate on both 31 December 2025 and 30 June 2026 (Bank of England, checked 15 October 2026).
How much interest is that a day?
Amount × (8% + base rate) ÷ 365. On £1,000 with a 3.75% base rate (11.75% a year) it is about £0.32 a day.
Does this calculator store my data?
No. It runs entirely in your browser.
Sources
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.