Late payment interest calculator

How much interest can you charge on a late invoice?

If your customer is a business and your contract doesn't set its own interest rate, you can claim statutory interest at 8% a year plus the Bank of England base rate. For a debt where interest started between 1 July and 31 December 2026, that's 8% + 3.75% = 11.75% a year.

This comes from the Late Payment of Commercial Debts (Interest) Act 1998. You can't claim statutory interest if your contract already sets a different interest rate. If you decide to add interest, send the customer a new invoice for it.

Which Bank of England base rate do you use?

The one in force on the last reference date before interest started. For interest starting between 1 January and 30 June, use the rate on the 31 December before; for interest starting between 1 July and 31 December, use the rate on 30 June. That rate then stays fixed for that debt, even if the base rate changes later.

Interest starts the day after the payment was due. The calculator picks the right rate from the table below, and you can type over it.

Base rates from the Bank of England's Bank Rate history, checked on 19 October 2026. The latest change was on 18 December 2025, to 3.75%. The rate for interest starting from 1 January 2027 depends on the base rate on 31 December 2026, so check the Bank of England then.

How do you work out the daily interest?

Multiply the amount owed by the statutory rate to get a year's interest, divide by 365 for the daily figure, then multiply by the number of days late. On £1,000 at 11.75%, a year's interest is £117.50, which is about 32p a day, so 30 days late adds £9.66.

Interest = amount x (8% + base rate) ÷ 365 x days late

What compensation can you add to a late invoice?

On top of the interest, you can claim a fixed sum for the cost of recovering the debt: £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. You can only charge it once for each payment, and you can also claim reasonable costs of recovering the debt.

Can you charge late payment interest to a homeowner?

Not under this law. The Late Payment of Commercial Debts (Interest) Act 1998 only covers contracts where the buyer and the supplier are each acting in the course of a business. This calculator doesn't apply to homeowners or other consumers. For them, rely on clear payment terms agreed up front, a deposit and prompt reminders.

Our guides to chasing unpaid invoices and taking a deposit cover what to do with domestic customers.

When does an invoice count as late?

Once the payment date you agreed has passed. If you didn't agree one, the law says payment is late 30 days after the customer gets the invoice or after you do the work, whichever is later. Payment terms agreed between businesses should usually be no more than 60 days, unless a longer period is fair to both.

Put your payment terms on every quote and invoice, so there's no argument later about when payment was due.