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Late payment interest calculator for UK business debts
Between UK businesses, statutory interest on a late invoice runs at 8% a year over the Bank of England reference rate, which is the rate on 30 June or 31 December before interest starts. Add a fixed sum of £40, £70 or £100 for each invoice. This calculator works out the days late, the interest, the fixed sum and wording for the reminder.
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- Runs on your device, nothing is uploaded
- Free, no sign in
- No watermark, no file limit
How it works
- 1
Enter the debt
Type the invoice amount still owed.
- 2
Enter the dates
Type the date payment was due and the date it was paid, or leave today's date.
- 3
Check the reference rate
The rate fills in from the table for the half year interest started in; type it yourself for other dates.
- 4
Copy the claim
Read the interest, the fixed sum and the total, then copy the wording into your reminder.
8% over the reference rate
Gov.uk describes statutory interest as 8% plus the Bank of England base rate for business to business transactions. The rate order made under the Act fixes which base rate: the official dealing rate in force on 30 June for interest that starts to run between 1 July and 31 December, and on 31 December for interest that starts between 1 January and 30 June. Bank Rate was 3.75% on 31 December 2025 and on 30 June 2026, so interest starting in 2026 runs at 11.75%. The rate stays fixed for that debt.
The reference rate periods
The Bank of England's history shows Bank Rate at 4.75% from 7 November 2024, 4.25% from 8 May 2025, 4.00% from 7 August 2025 and 3.75% from 18 December 2025. That gives reference rates of 4.75% for interest starting in the first half of 2025, 4.25% for the second half of 2025 and 3.75% for both halves of 2026. The 4.00% rate never became a reference rate because it was not in force on a 30 June or 31 December.
Daily interest, worked out
Gov.uk's method is to work out a year's interest on the debt, divide by 365 for the daily amount, and multiply by the days late. Its own example is £1,000 at a base rate of 0.5%: £85 a year, 23p a day, £11.50 after 50 days. The calculator follows the same method without rounding the daily figure first, so its answer can be a penny higher than one that does. Interest runs from the day after the due date until payment.
The fixed sum
On top of interest, a supplier can claim a fixed amount for the cost of recovering each late payment: £40 for a debt up to £999.99, £70 from £1,000 to £9,999.99 and £100 for £10,000 or more. It can be charged once per payment, not per reminder. Reasonable recovery costs above that, such as a debt agency's fee, can sometimes be claimed as well, which the calculator does not add.
Putting the claim in a reminder
A reminder that names the Act, the rate, the date interest started, the amount so far and the daily amount from then on is much harder to ignore than a request to pay. The calculator writes that sentence for you. For an invoice sent from the proposals module, its reminder presets send scheduled reminders after the due date, and the overdue amount with this claim can go into a formal letter written by the AI document generator.
Limits
- Law checked on 21 October 2026 against the Late Payment of Commercial Debts (Interest) Act 1998, its rate order and gov.uk. This is arithmetic, not legal advice.
- Reference rates on file: 4.75% for interest starting in January to June 2025, 4.25% for July to December 2025, and 3.75% for both halves of 2026, from the Bank of England's Bank Rate history.
- Business to business debts only; a contract with its own substantial remedy for late payment replaces statutory interest.
- Simple interest over 365 days; no court fees or reasonable recovery costs above the fixed sum.
What it does not do
- It does not send the reminder.
- It does not track part payments.
- It does not store the invoice details.
Questions people ask
How much interest can I charge on a late invoice in the UK?
Between businesses, statutory interest of 8% a year over the reference rate, which gives 11.75% for interest that starts running in 2026, plus a fixed sum of £40, £70 or £100 depending on the size of the debt. A contract can set its own rate instead, if it is a substantial remedy.
Which base rate do I use for late payment interest?
The Bank of England rate in force on 30 June for interest that starts running between 1 July and 31 December, or on 31 December for interest that starts between 1 January and 30 June. That rate then applies to the debt until it is paid.
Can I add the fixed compensation too?
Yes. The fixed sum of £40, £70 or £100 is claimed in addition to statutory interest, once for each late payment. It is meant to cover the cost of chasing the debt, and reasonable extra recovery costs can be claimed where they are higher.
Can I charge late payment interest to a consumer?
Not under this Act, which covers only debts between businesses, including public sector bodies buying from businesses. Interest on a consumer debt depends on the contract terms, which must be fair under consumer law, or on court rules once a claim is made.
When does statutory interest start?
From the day after the agreed payment date. If no date was agreed, payment is due 30 days after the later of the customer receiving the invoice or the goods or services, and interest starts after that. Agreed terms over 60 days must be fair and reasonable.
Do I have to warn the customer before charging interest?
No warning is required by the Act, because statutory interest is implied into business contracts. In practice, stating your payment terms and the right to statutory interest on invoices, and naming the amount in the first reminder, makes payment more likely.
Write the payment demand
Take what you made here into documents.
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Background reading: the question page on this.
Written and checked by the OneCraft team. Last checked .