Late payment interest calculator

What the Late Payment of Commercial Debts Act lets you add

The Late Payment of Commercial Debts (Interest) Act 1998 lets a business charge a late-paying business customer statutory interest at 8% over the Bank of England base rate — 11.75% for a debt that went late between 1 July 2026 and 31 December 2026 — plus fixed compensation of £40, £70 or £100 depending on the size of the debt. You don't need it in your terms; the Act applies by default. Two things to know before you send it. The rate is set by the half-year the debt became late and stays there, so an older invoice accrues at its own rate rather than today's. And a contract of your own that already sets out a late-payment remedy can displace the statutory one, provided that remedy is a substantial one — so if you signed the customer's terms, read them before quoting the Act.

How to calculate late payment interest

Statutory interest is simple and daily. The calculation is:

invoice amount × statutory rate ÷ 365 × days overdue

1. Find the rate for the half-year the invoice went late — the table below has it.
2. Multiply the invoice amount by that rate and divide by 365. That's one day's interest.
3. Multiply by the number of days since it was due, then add the fixed compensation for the invoice's size.

A worked example at 11.75%: a £3,000 invoice 30 days overdue carries £28.97 of interest (£3,000 × 11.75% ÷ 365 × 30) and £70 of compensation — £3,098.97 now due, growing 97p a day until it's paid.

Late payment compensation: £40, £70 or £100

On top of the interest, each late invoice carries a fixed late payment fee set by the size of the debt. It's claimed once per invoice and doesn't grow with time.

If chasing the debt cost you more than that — a collection agency's fee, for instance — you can claim the reasonable extra cost as well.

The statutory interest rate, half-year by half-year

The base rate on 31 December sets the rate for January to June; the base rate on 30 June sets July to December. Use the row for the half-year the invoice went late, however long ago that was.

Base rates from the Bank of England. Last checked 19 August 2026.

Business customers only

The statutory sums apply between businesses — a landlord with a portfolio, a letting agent, a shop, a main contractor. They don't apply to an individual paying for work on their own home; there you can only charge interest if your terms say so. Tell the calculator who the customer is and it keeps the letter honest — for an individual it writes a firm reminder instead.

If the letter doesn't work

Most invoices get paid once the customer sees the debt growing daily and a business that clearly knows its rights. If yours doesn't, the next rung is a letter before action and then the small claims court — the guides on what to do when a customer won't pay and taking an unpaid invoice to small claims walk through both.

Common questions about late payment interest

When does late payment interest start?

The day after the invoice was due. If you never agreed a payment date, it starts 30 days after the customer received the invoice or the work was done, whichever is later.

Is it simple or compound interest?

Simple. Work out a day's interest on the original amount and multiply by the days overdue — interest is never charged on interest.

Is the compensation per invoice?

Yes. The £40, £70 or £100 is claimed once for each late invoice, not once per customer, and it doesn't grow with time.

Can I claim more than the fixed compensation?

If recovering the debt cost you more — a debt collector's fee, say — you can claim the reasonable extra cost on top of the fixed sum.

Can I charge a late payment fee to a homeowner?

Not under the Act. It applies between businesses only. With a private customer you can charge interest only if your terms said so and they agreed to them before the work started.

Do my invoices need to mention late payment interest?

No. The Act applies by default between businesses, whether or not your terms or invoice mention it. Saying so on the invoice does make the first chase easier.