Late payment interest calculator (UK)
A business customer hasn't paid your invoice on time? UK law lets you claim statutory interest and a fixed sum for recovery costs. Enter the details to see what you could add, then use the chase letter generator to ask for it.
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How it's worked out
- Statutory interest for business-to-business debts is 8% plus the Bank of England base rate a year. Daily interest is the amount × rate ÷ 365, multiplied by the number of days late.
- The base rate is 3.75% (checked on the Bank of England website on 18 October 2026; the next decision is due on 5 November 2026). Which base rate counts depends on when the interest starts: see the reference rate section below. The calculator fills it in from the due date, and you can change it.
- Fixed compensation per late payment: £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. You can charge it once per invoice, on top of interest.
- You can't claim statutory interest if your contract sets a different interest rate. It doesn't apply to private customers (consumers).
- If no payment date was agreed, a payment is late 30 days after the customer gets your invoice, or after you deliver (if that's later).
- If you decide to add interest, GOV.UK says to send a new invoice for it.
Which base rate applies? The reference rate
The rate isn't simply today's base rate. Under the Late Payment of Commercial Debts (Rate of Interest) Order 2002, statutory interest is 8% a year over the base rate in force on 30 June (for interest that starts to run between 1 July and 31 December) or 31 December (for interest that starts to run between 1 January and 30 June) immediately before the day interest starts.
Interest starts to run on the day after the payment was due. So an invoice due on 15 October 2026 starts building up interest on 16 October 2026, and uses the base rate in force on 30 June 2026. The rate is set by that start date, so a later change in the base rate doesn't change it for that invoice. Scotland has its own Order with the same wording.
| Interest starts | Base rate on | Base rate | Total rate |
|---|---|---|---|
| 1 January 2027 to 30 June 2027 | 31 December 2026 | Not known yet | 8% + that rate |
| 1 July 2026 to 31 December 2026 | 30 June 2026 | 3.75% | 11.75% |
| 1 January 2026 to 30 June 2026 | 31 December 2025 | 3.75% | 11.75% |
| 1 July 2025 to 31 December 2025 | 30 June 2025 | 4.25% | 12.25% |
| 1 January 2025 to 30 June 2025 | 31 December 2024 | 4.75% | 12.75% |
| 1 July 2024 to 31 December 2024 | 30 June 2024 | 5.25% | 13.25% |
| 1 January 2024 to 30 June 2024 | 31 December 2023 | 5.25% | 13.25% |
| 1 July 2023 to 31 December 2023 | 30 June 2023 | 5.00% | 13.00% |
| 1 January 2023 to 30 June 2023 | 31 December 2022 | 3.50% | 11.50% |
Base rates from the Bank of England's Bank Rate history. The rate for interest starting from 1 January 2027 depends on the base rate on 31 December 2026, which isn't known yet; until then the calculator uses today's 3.75% and tells you to check it.
Chase letter generator
Three ready-to-send emails or letters, filled in from the calculator above: a polite first reminder, a firmer second reminder, and a final notice that claims statutory interest and compensation. Add your details, then copy the one you need.
1. Polite first reminder
For the first few days after the due date. Plenty of late payments are just missed emails.
2. Firmer second reminder
About two weeks late: a pay-by date, and a mention of what you're entitled to.
3. Final notice claiming interest and compensation
Still unpaid: sets out the statutory interest, the fixed compensation and the new total. Send it with a new invoice showing the same figures.
These are plain-English templates, not legal advice. Only claim statutory interest and compensation from a business customer, and only if your contract doesn't set its own late payment interest. If the client disputes the invoice, or you're thinking about court, check GOV.UK or get advice first. Nothing you type here leaves your browser.
Want automatic chasing?
I'm thinking about building a simple UK invoice chaser: it would send these reminders on a schedule and add the late payment interest and compensation for you. If you'd use it, email to be told if it launches. There's no sign-up form, and I'll only email you about the launch.
Track every invoice in one sheet
The UK Freelance Invoice & Late Payment Tracker logs every invoice, works out due dates and status, flags what's overdue, prints invoices, and calculates this interest and compensation automatically, with ready-to-copy reminder messages. It's available now in the Straight Sums shop for £7.
Get the tracker (£7)Planning for your tax bill too? Try the free tax set-aside calculator. New to chasing invoices? Read the late paying clients guide.
Frequently asked questions
How much interest can I charge on a late invoice in the UK?
If another business pays late and your contract doesn't set its own interest rate, you can charge statutory interest of 8% a year plus the Bank of England base rate (the reference rate). With the base rate at 3.75% that's 11.75% a year. Work out the yearly interest on the amount owed, divide by 365 for a daily figure, then multiply by the number of days late.
Which Bank of England base rate do I use for late payment interest?
The law uses a reference rate fixed by the date interest starts, which is the day after the payment was due. If interest starts between 1 January and 30 June, use the base rate in force on the 31 December before. If it starts between 1 July and 31 December, use the base rate in force on the 30 June before. For any invoice due from 31 December 2025 to 30 December 2026 that's 3.75%, so 11.75% in total.
How much compensation can I claim for a late payment?
A fixed sum for each late payment, on top of interest: £40 if the debt is up to £999.99, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more. You can only charge it once for each payment. If your reasonable costs of recovering the debt are more than the fixed sum, the law lets you claim the difference too.
When does an invoice count as late?
If you agreed a payment date, it's late after that date. Agreed terms must usually be within 60 days for business customers and 30 days for public authorities. If no date was agreed, payment is late 30 days after the customer gets the invoice, or after you deliver the goods or service if that's later.
Can I charge late payment interest to individual customers?
No. Statutory interest and the fixed compensation are for business-to-business debts, when another business (or a public authority) pays late. They don't apply to private customers (consumers).
Do I need to send a new invoice to claim late payment interest?
GOV.UK says to send a new invoice if you decide to add interest to the money you're owed. The final notice from the letter generator on this page lists the interest and compensation so you can put the same figures on the new invoice.
What should a late payment reminder say?
Start polite: the invoice number, amount and due date, and a copy of the invoice. A second reminder can give a pay-by date and say you're entitled to statutory interest and compensation. A final notice sets out the interest, the compensation and the new total, with a deadline. The letter generator on this page fills in all three from your figures.
Sources
GOV.UK: when a payment becomes late, interest on late commercial payments and claiming debt recovery costs; legislation.gov.uk: Late Payment of Commercial Debts (Interest) Act 1998, section 4 (when interest starts), section 5A (fixed compensation), Rate of Interest (No. 3) Order 2002, article 4 and the Scotland Order 2002, article 4; Bank of England: current Bank Rate and Bank Rate history. All checked on 18 October 2026.