Late Payment Calculator
Invoice unpaid? Charge interest.
UK law gives every business the right to statutory interest — Bank of England base rate plus 8% — and fixed compensation on overdue commercial invoices. This free late payment interest calculator works out exactly what you're owed under the Late Payment of Commercial Debts (Interest) Act 1998, with a demand paragraph ready to paste into your chaser email.
Calculate
Pre-filled from the due date. The Act fixes it twice a year: the base rate on 31 December applies January–June, the rate on 30 June applies July–December.
The rules
Three
entitlements
The Late Payment of Commercial Debts (Interest) Act 1998 applies automatically to business-to-business contracts for goods and services — you don't need a clause in your terms, and the customer can't opt out unless the contract provides a substantial alternative remedy.
- № 01
Statutory interest — base + 8%
Simple (not compound) interest at the Bank of England base rate plus 8 percentage points, calculated daily on the gross debt including VAT. The base rate is fixed for each half-year: the rate in force on 31 December applies to debts falling due January to June, and the 30 June rate applies July to December. Interest runs from the day after the due date until the day you're paid.
- № 02
Fixed compensation — £40 to £100
A flat sum per overdue invoice, on top of the interest: £40 for debts under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more. It compensates the hassle of chasing, and it's claimable the moment the invoice goes overdue — no need to prove any actual cost.
- № 03
Reasonable recovery costs
If chasing the debt costs you more than the fixed sum — a solicitor's letter, a debt collection agency — you can claim the reasonable excess as well. Added by the 2013 amendment to the Act, and routinely upheld in the small claims track.
FAQ
Common
questions
What UK sole traders and small companies ask before adding interest to a chaser email. General information, not legal advice.
- Q1
Can I really charge interest on a late invoice?
Yes, if both you and the customer are businesses. The Late Payment of Commercial Debts (Interest) Act 1998 gives you the right automatically — it doesn't need to be in your contract or on the invoice. It does not apply to consumer sales.
- Q2
When does an invoice become late?
On the day after your agreed payment terms expire. If nothing was agreed, the Act sets a default: 30 days after the customer received your invoice or you delivered the goods or services, whichever is later. B2B terms longer than 60 days are only enforceable if they are not grossly unfair to the supplier.
- Q3
What rate is late payment interest charged at?
Bank of England base rate plus 8 percentage points, as simple daily interest on the gross debt including VAT. The base rate is frozen per half-year — 31 December's rate covers January to June, 30 June's covers July to December — so a mid-period rate change doesn't alter a debt already running.
- Q4
Do I have to warn the customer first?
No warning is legally required — the entitlement arises by statute the day the debt goes overdue. In practice most businesses state the right on their invoices and mention the accruing figure in the first polite chaser; the number concentrates minds, and paying the principal quickly usually matters more than collecting the interest.
- Q5
What if my contract already sets an interest rate?
A contractual late-payment clause displaces the statutory scheme only if it is a "substantial remedy" — a token rate like 1% won't qualify and the statutory rate applies instead. If your contract charges a meaningful rate, claim under the contract; otherwise claim under the Act.
Before the chaser
Send invoices that hold up.
A late-payment claim starts with a correct invoice — right date of supply, right VAT treatment, right company details. Our free UK invoice maker handles all of it.
Free invoice maker