Free Tool
Late Payment Interest Calculator
Work out the statutory interest and fixed compensation you can add to a late business invoice, ready to put in your final notice.
No payment date agreed? For business customers it defaults to 30 days after they received the invoice.
Use the base rate in force on 30 June or 31 December before the payment went late. Check the rate history.
What You Are Entitled to Claim
When a business customer pays you late, the Late Payment of Commercial Debts (Interest) Act 1998 lets you add two things to what they owe: statutory interest, and a fixed sum towards the cost of chasing it.
Statutory interest runs at 8% a year plus the Bank of England base rate, from the day after the payment was due until the day it is paid. The fixed compensation depends on the size of the debt and is charged once per invoice.
- Debts up to £999.99: £40
- Debts of £1,000 to £9,999.99: £70
- Debts of £10,000 or more: £100
How the Interest Is Worked Out
Take the invoice amount, multiply it by the annual rate (8% plus base rate), and divide by 365 to get the daily interest. Multiply that by the number of days the payment is late.
The base rate you use is not whatever it is today. It is the rate in force on 30 June for interest that starts between 1 July and 31 December, or on 31 December for interest that starts between 1 January and 30 June. The calculator tells you which date applies once you enter the due date.
Example: a £2,000 invoice, a base rate of 4%, paid 30 days late. That is 12% a year, so £240 a year, or about 66p a day. Thirty days comes to £19.73 in interest, plus £70 compensation, so £2,089.73 in total.
When You Cannot Charge It
- The customer is a homeowner or other consumer. The Act only covers business to business debts.
- Your contract already sets its own late payment interest rate. The contract rate applies instead, as long as it is a substantial remedy.
- The invoice is not actually late yet. If no payment date was agreed, a business customer has 30 days from receiving the invoice.
For homeowner jobs, the protection is setting clear payment terms in writing before you start, including any late payment charge. The payment terms guide on our blog covers how to word them.
Should You Actually Add It?
Most trades do not want to charge a good customer interest for being a week late, and nobody is obliged to. The value is in the letter: stating the exact interest and compensation figure turns a polite reminder into a formal notice, and that is often what gets an invoice moved to the top of the pile.
If you are going to use it, say so in your terms from the start, send reminders on a fixed schedule, and put the calculated figure in your final notice rather than a vague threat of charges.
Frequently Asked Questions
How much interest can I charge on a late invoice in the UK?
On business to business invoices, statutory interest of 8% a year plus the Bank of England base rate, from the day after the due date until payment, under the Late Payment of Commercial Debts (Interest) Act 1998. You can also claim fixed compensation of £40, £70 or £100 depending on the size of the debt.
Which Bank of England base rate do I use?
The rate in force on 30 June if interest started between 1 July and 31 December, or the rate on 31 December if interest started between 1 January and 30 June. It is fixed for that six month period, even if the base rate changes afterwards.
Can I charge late payment interest to a homeowner?
Not under the Act, which only applies between businesses. You can agree your own reasonable late payment terms with a homeowner in writing before the job starts, and rely on those instead.
Is the £40 compensation per invoice or per customer?
Per invoice. You can charge the fixed sum once for each overdue payment, so three late invoices from the same customer can each carry their own compensation, on top of the interest.
When does an invoice count as late if we never agreed payment terms?
For business customers, payment is due 30 days after they received the invoice, or after they received the goods or services if that was later. Interest can run from the day after that.
Based on the Late Payment of Commercial Debts (Interest) Act 1998 and GOV.UK guidance, checked September 2026. General guidance for trade businesses rather than legal advice for your circumstances, so take advice before starting court action.
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