UK Late Payment Interest Calculator
Calculate statutory interest on late-paid UK B2B invoices under the Late Payment of Commercial Debts Act 1998. Auto-applies the current Bank of England base rate + 8% plus fixed compensation for debt recovery costs.
UK Late Payment Act: Key Provisions
The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses powerful rights.
Bank of England base rate + 8% per annum, calculated daily from the day after the due date.
£40 / £70 / £100 depending on invoice size — claimable once per invoice.
Recovery costs above the fixed amount can be claimed if they are reasonable and evidenced.
How to Claim Statutory Interest
- Reference the Act: In your demand letter, cite the Late Payment of Commercial Debts (Interest) Act 1998 and state the specific amount of interest and compensation.
- Show the calculation: Break down: invoice amount × statutory rate ÷ 365 × days overdue. Transparency makes the claim harder to dispute.
- Include on revised invoices: Send an updated invoice with a separate line item for statutory interest and fixed compensation.
- Keep it proportionate: For small overdue amounts or first-time late payers, mention the entitlement but consider waiving on the first instance to preserve the relationship.
Frequently Asked Questions
What is the UK statutory interest rate for late payment?+
The statutory rate is the Bank of England base rate plus 8%. As of 2026, with the base rate at 4.5%, the statutory rate is 12.5% per annum. This rate applies automatically to B2B commercial debts under the Late Payment of Commercial Debts (Interest) Act 1998.
What is the fixed compensation for late payment in the UK?+
You can claim a fixed sum for debt recovery costs: £40 for debts up to £999.99, £70 for debts from £1,000 to £9,999.99, and £100 for debts of £10,000 or more. This is in addition to statutory interest and any reasonable recovery costs above the fixed sum.
Does the Late Payment Act apply to all invoices?+
It applies to B2B (business-to-business) commercial transactions where both parties are acting in the course of business. It does not apply to consumer transactions (B2C) or to debts where you have contractually agreed to a different interest rate that is a 'substantial remedy' for late payment.
Can I claim statutory interest if my contract has no late payment clause?+
Yes. That is one of the key benefits of the Act — statutory interest applies automatically to qualifying B2B debts unless you have contractually agreed to an alternative remedy that qualifies as 'substantial'. If your contract is silent on late payment, statutory interest applies by default.
How do I calculate statutory interest on an overdue invoice?+
Daily interest = (Invoice Amount × Statutory Rate) ÷ 365. Multiply by the number of days overdue. For a £5,000 invoice at 12.5%, the daily interest is £1.71. After 60 days overdue, the interest is £102.74 plus £70 fixed compensation = £172.74 total claim on top of the invoice.
Can I claim reasonable recovery costs above the fixed compensation?+
Yes. If your actual debt recovery costs exceed the fixed compensation amount (e.g. due to solicitor fees or debt collection agency charges), you can claim 'reasonable' costs on top. Keep records of all recovery costs to support your claim.
Complete Guide to UK Late Payment Rights
The UK has some of the strongest late payment protections in the world for B2B transactions. The Late Payment of Commercial Debts (Interest) Act 1998, amended by the Late Payment of Commercial Debts Regulations 2013, gives creditors automatic statutory rights that apply even when the contract is silent on late payment.
When Statutory Interest Starts Accruing
Interest begins the day after the agreed payment date. If no payment date was agreed, the default is 30 days after the goods/services were delivered or the invoice was received — whichever is later. For public sector contracts, the maximum payment period is 30 days; for private sector, it is 60 days unless a longer period can be justified.
Contractual vs. Statutory Interest
If your contract specifies a late payment interest rate, the statutory rate may not apply — but only if the contractual rate qualifies as a “substantial remedy” for late payment. A contractual rate significantly below the statutory rate (e.g. 2% vs. 12.5%) may be challengeable as not substantial, in which case the statutory rate can be claimed instead. For UK-specific letter templates to accompany your claim, see the UK overdue invoice letter templates.
Using Statutory Interest as Leverage
Many businesses include the statutory interest calculation in their reminder emails without actually adding it to the invoice initially. This acts as a warning: “Please note that under the Late Payment of Commercial Debts Act 1998, we are entitled to claim £X in statutory interest plus £Y in compensation.” This is often enough to prompt payment without needing to formally claim. For a step-by-step approach, see the overdue invoice letter templates guide.
Interest calculated. Now chase the payment systematically.
InvoiceGrid tracks every invoice from sent to paid, alerts you the moment one goes overdue, and logs every chase attempt — so you have a full paper trail if you need to escalate.
Also useful: UK overdue invoice letter templates · Late fee calculator (US) · Overdue invoice letter templates · How to charge late fees