Late payment interest calculator
Work out what you can claim on a late business invoice under UK late payment law: daily interest at 8% plus base rate, and fixed compensation.
The late invoice
Use the base rate on 31 December (for debts late January to June) or 30 June (July to December). Check the current rate on the Bank of England website.
What you could claim
Business-to-business invoices only. A guide, not legal advice.
How late payment interest is worked out
Under the Late Payment of Commercial Debts (Interest) Act 1998, a business that pays another business late can be charged statutory interest at 8% a year plus the Bank of England base rate, unless the contract sets a different rate. Use the base rate in force on 31 December for debts that became late between January and June, and the rate on 30 June for debts that became late between July and December.
The calculator works out simple daily interest: the invoice amount, times the annual rate, divided by 365, times the number of days late. It then adds fixed compensation for the cost of recovering the debt:
| Invoice amount | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
The law only covers business-to-business invoices, not invoices to private individuals. Read our full guide to late payment interest and compensation for when and how to claim, and check GOV.UK for the current rules.
Questions and answers
Can I charge late payment interest to homeowners?
Not under the Late Payment of Commercial Debts (Interest) Act, which only covers business-to-business debts. You can only charge consumers interest if it was fairly agreed in your terms beforehand.
Which base rate should I use?
The Bank of England base rate on 31 December for debts that became late between 1 January and 30 June, or on 30 June for debts that became late between 1 July and 31 December.
Can I claim compensation as well as interest?
Yes. You can usually claim fixed compensation of £40, £70 or £100 depending on the size of the debt, plus reasonable recovery costs in some cases.
Related guides
Late payment interest and compensation in the UK
If a business customer pays you late, the law may entitle you to interest and a fixed compensation sum. Here is how it works and when it is worth using.
Getting paidHow to invoice as a UK sole trader
What has to be on the invoice, what helps you get paid faster, and the mistakes that cause awkward conversations with customers and HMRC.
Getting paidHow to set up Direct Debit for regular customers
If you visit the same customers every week or month, Direct Debit can end the chasing for good. Here is how it works and how to introduce it.
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