Late Payment Interest Calculator
On an unpaid business-to-business invoice you can charge statutory interest of 8% above the Bank of England base rate, plus a fixed recovery sum. For interest that started to run between 1 July 2026 and 31 December 2026, that works out at 11.75% a year, plus a fixed recovery sum of £40, £70 or £100 depending on the size of the debt. These rights come from the Late Payment of Commercial Debts (Interest) Act 1998. Work out what you are owed below, then copy the demand letter; no email required.
Rates checked against gov.uk (Late commercial payments: charging interest and debt recovery). The rate is fixed for each half year: it is 8% over the base rate in force on 30 June or 31 December just before the interest starts to run (Rate of Interest Order 2002, article 4). This calculator uses the 3.75% base rate in force on 30 June 2026, which covers interest that started to run between 1 July 2026 and 31 December 2026. If your invoice fell due earlier, check the base rate on the right date with the Bank of England.
Statutory interest on a late commercial (business to business) debt is 8% above the Bank of England base rate, which is 11.75% a year for interest that started to run between 1 July 2026 and 31 December 2026 (base rate 3.75% on 30 June 2026), under the Late Payment of Commercial Debts (Interest) Act 1998. The creditor can also claim a fixed recovery sum: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Interest is calculated as amount times annual rate times days overdue divided by 365, and accrues daily until paid. More detail + scope
This page covers
UK statutory late payment interest and debt recovery: the rate, the fixed sum bands, how to calculate interest, a demand letter, and the contractual-rate exception
Not covered here
Formal escalation (see /tools/letter-before-action-template/), chasing routes (see /unpaid-invoices/), releasing cash instead of waiting (see /guides/how-invoice-finance-works/)
Work out what you are owed
Statutory interest to date: £72.43 (at 11.75% a year)
Fixed recovery sum: £70.00
Total you can claim on top of the invoice: £142.43
Interest continues to accrue at about £1.61 a day until the invoice is paid.
Copy the demand letter
A short, firm demand that states the statutory figures. Square brackets mark the fields to replace with the amounts from the calculator above.
[Your company name] [Your address] [Date] [Customer company name] [Customer address] Dear [name], Re: Overdue invoice [invoice number] dated [invoice date] Our invoice [invoice number] for [GBP amount] fell due for payment on [due date] and remains unpaid. As the debt is a commercial debt between businesses, we are entitled to statutory interest and a fixed recovery sum under the Late Payment of Commercial Debts (Interest) Act 1998. We are therefore claiming: Outstanding invoice: [GBP amount] Statutory interest to date: [GBP interest] (at 11.75% a year) Fixed recovery sum: [GBP 40 / 70 / 100] Total now due: [GBP total] Interest continues to accrue daily until payment is received. Please pay the total due within 7 days to the account below. [Bank name] Sort code: [00-00-00] Account: [00000000] Reference: [invoice number] If payment is not received we reserve the right to begin recovery action without further notice. Yours faithfully, [Your name] [Your company name]
How statutory late payment interest works
The Late Payment of Commercial Debts (Interest) Act 1998 gives a business an automatic right to interest on a commercial debt owed by another business. The rate is 8% above the Bank of England base rate, so for interest that started to run between 1 July 2026 and 31 December 2026 (base rate 3.75% on 30 June 2026) it is 11.75% a year. Interest runs from the day after payment was due (the agreed date, or 30 days after delivery or invoice if no date was agreed) until the debt is paid.
On top of interest you can claim a one-off fixed recovery sum set by the legislation:
- £40 for a debt of less than £1,000
- £70 for a debt of £1,000 to £9,999.99
- £100 for a debt of £10,000 or more
If your actual reasonable costs of recovering the debt come to more than the fixed sum, you can claim the difference as well. The right is automatic unless your contract already sets a substantial alternative late-payment remedy.
| Item | Value |
|---|---|
| Invoice amount | £5,000.00 |
| Statutory rate | 11.75% (BoE base 3.75% on 30 June 2026 + 8%) |
| Days overdue | 45 |
| Daily interest | £1.61 |
| Total interest accrued | £72.43 |
| Fixed compensation (debt £1,000 to £9,999.99) | £70.00 |
| Total interest + compensation due | £142.43 |
| Total now due including principal | £5,142.43 |
Source: Late Payment of Commercial Debts (Interest) Act 1998; Rate of Interest Order 2002 art. 4; Bank of England base rate 3.75% in force on 30 June 2026
Fixed compensation tiers: £40 under £1,000, £70 from £1,000 to £9,999.99, £100 at £10,000 and above, per overdue invoice.
View as plain-text Markdown
### Worked example: £5,000 invoice paid 45 days late at the statutory rate | Item | Value | | --- | --- | | Invoice amount | £5,000.00 | | Statutory rate | 11.75% (BoE base 3.75% on 30 June 2026 + 8%) | | Days overdue | 45 | | Daily interest | £1.61 | | Total interest accrued | £72.43 | | Fixed compensation (debt £1,000 to £9,999.99) | £70.00 | | Total interest + compensation due | £142.43 | | Total now due including principal | £5,142.43 | Source: Late Payment of Commercial Debts (Interest) Act 1998; Rate of Interest Order 2002 art. 4; Bank of England base rate 3.75% in force on 30 June 2026 Fixed compensation tiers: £40 under £1,000, £70 from £1,000 to £9,999.99, £100 at £10,000 and above, per overdue invoice.
“Statutory interest is what you are legally entitled to claim, not what you are guaranteed to collect. The figure is the entitlement; whether you pursue it, and whether the debtor pays, is a separate commercial decision.”
Charging interest is not the only answer to slow payers
Statutory interest compensates you for waiting, but it does not fund your business while you wait. If slow payment is a recurring cashflow problem rather than a one-off, invoice finance can advance part of an invoice's value soon after you raise it (how much and how fast depends on the provider), and a factoring facility chases your customers for you. For a firmer written escalation before court, see the letter before action template; for the full range of options, the unpaid invoices hub.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.
Last updated: