This calculator works out the statutory interest and fixed compensation you can claim when another business pays your invoice late. Under the Late Payment of Commercial Debts (Interest) Act 1998, interest runs at 8% a year above the Bank of England reference rate, and you can add a one-off fixed sum of £40, £70 or £100 depending on the size of the debt. For invoices that fell due between 1 July and 31 December 2026 the reference rate is 3.75%, so statutory interest is 11.75% a year.
Quick answers
- Statutory interest rate: 8% a year plus the Bank of England reference rate, for business to business debts where the contract sets no other rate.
- Reference rate: the Bank Rate in force on 30 June for debts that fall due from 1 July to 31 December, and on 31 December for debts due from 1 January to 30 June.
- Rate for debts due 1 July to 31 December 2026: 11.75% a year, because Bank Rate was 3.75% on 30 June 2026.
- Fixed compensation: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, under section 5A of the Act.
- Once per invoice: the fixed sum can be charged once for each late payment, on top of interest.
- Simple interest: daily interest is the debt multiplied by the annual rate, divided by 365.
How the calculator works
You enter the invoice amount, how many days late it is and the reference rate for the period.
- Annual rate. 8% plus the reference rate you enter.
- Daily interest. Invoice amount × annual rate ÷ 365.
- Interest to date. Daily interest × days overdue.
- Fixed compensation. £40, £70 or £100 depending on the invoice amount.
- Total claim. Interest plus compensation, on top of the invoice itself.
The reference rate is fixed for the life of the debt by the date it fell due, so a later change in Bank Rate does not change the rate on an existing invoice. Bank Rate rose to 4% on 5 November 2026, which will set the rate for debts due from 1 January 2027 only if it is still 4% on 31 December 2026.
Worked example
A supplier’s £2,500 invoice fell due on 30 September 2026 and is paid 45 days late.
| Step | Working | Result |
|---|---|---|
| Statutory rate | 8% plus 3.75% (Bank Rate on 30 June 2026) | 11.75% a year |
| Daily interest | £2,500 × 11.75% ÷ 365 | £0.80 |
| Interest for 45 days | £0.8048 × 45 (unrounded daily figure) | £36.22 |
| Fixed compensation | Debt of £1,000 to £9,999.99 | £70 |
| Total claim on top of the invoice | £36.22 plus £70 | £106.22 |
How to claim late payment interest
You can claim statutory interest without it being in your contract, as long as the contract does not set its own rate.
- Check the debt qualifies. It must be a business to business supply of goods or services. Consumer debts are not covered.
- Find the due date. Use the agreed payment terms. If none were agreed, the default is 30 days after the customer received the invoice or the goods.
- Look up the reference rate. Use the Bank Rate on 30 June or 31 December before the debt fell due.
- Work out the interest and the fixed sum. Use this calculator.
- Write to the customer. Set out the invoice, days late, rate, interest and fixed sum. You can also claim reasonable extra recovery costs if the fixed sum does not cover them.
Our guide to charging late payment interest and compensation covers the wording to use, and how to chase an unpaid invoice has an email timeline. If a large customer is the problem, see the Small Business Commissioner.
Sources
- Late commercial payments: charging interest (GOV.UK)
- Late commercial payments: claim debt recovery costs (GOV.UK)
- Late Payment of Commercial Debts (Interest) Act 1998, section 5A (legislation.gov.uk)
- Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (legislation.gov.uk)
- Bank Rate history (Bank of England)
Frequently asked questions
What is the statutory late payment interest rate now?
For debts that fell due between 1 July and 31 December 2026 it is 11.75% a year: 8% plus the 3.75% Bank Rate in force on 30 June 2026.
Can I charge interest if it is not in my terms?
Yes. Statutory interest applies to business to business debts automatically, unless the contract sets a different rate.
Is the £40, £70 or £100 charged per invoice?
Yes. You can charge the fixed sum once for each late payment, in addition to interest.
Can I charge late payment interest to consumers?
No. The 1998 Act only covers debts between businesses, including public sector bodies buying from businesses.
Is the interest compound?
No. It is simple interest, worked out daily on the amount owed.