Late Payment Interest Calculator UK

What Is Statutory Interest on Late Payments?

Under the Late Payment of Commercial Debts (Interest) Act 1998, UK businesses have the legal right to charge interest on overdue B2B invoices. The statutory rate is set at 8% above the Bank of England base rate, calculated on a daily pro-rata basis from the date the payment became overdue.

As of March 2026, the BoE base rate is 3.75%, making the total statutory interest rate 11.75% per annum.

When Can You Charge Interest?

Statutory interest applies to business-to-business (B2B) commercial debts only. You can charge it automatically once a payment is overdue, unless your contract specifically excludes statutory interest and provides a "substantial remedy" for late payment instead.

If no payment terms are agreed, the default payment period is 30 days from delivery of goods/services or receipt of invoice, whichever is later.

Fixed Compensation Explained

In addition to interest, the Act entitles you to claim fixed compensation for each overdue invoice:

• £40 — for debts up to £999.99
• £70 — for debts between £1,000 and £9,999.99
• £100 — for debts of £10,000 or more

This compensation is payable per invoice, not per debtor — so multiple overdue invoices from the same customer each attract their own compensation amount.

How to Claim Late Payment Interest

You can claim statutory interest and compensation by:

1. Including a late payment clause in your standard terms and conditions
2. Adding interest charges to overdue invoices or issuing separate penalty invoices
3. Using automated tools like AutoSettle to calculate and collect charges
4. Escalating to a Letter Before Action (LBA) for non-responsive debtors

Best practice: Always reference the Late Payment of Commercial Debts Act in your correspondence to demonstrate legal authority behind your claim.