UK Late Payment Interest Calculator
Calculate what you’re owed in statutory interest and compensation on overdue commercial invoices under UK law.
The date payment was due. Interest starts accruing the day after this date.
Current rate: 11.75% p.a. (8% + Bank of England base rate 3.75%). For debts that became overdue in an earlier half-year period, a different base rate may apply.
Enter an amount and due date to calculate.
About UK Statutory Interest on Late Payments
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses and freelancers in the UK can charge interest on invoices that are paid late. This applies to all business-to-business (B2B) transactions. It does not apply to consumer debts.
The statutory interest rate is 8% plus the Bank of England base rate. For debts becoming overdue between January and June 2026, the applicable base rate is 3.75%, making the total statutory rate 11.75% per annum.
Interest starts accruing the day after the due date. If no payment terms were agreed, the law defaults to 30 days from the later of the invoice date or the date goods were delivered / services provided. Public authorities must pay within 30 days; B2B contracts can agree up to 60 days.
Fixed compensation
In addition to interest, you can claim a fixed sum as compensation for the cost of recovering the debt:
| Debt amount | Compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
What is a Letter Before Action?
If your client still hasn’t paid after reminders, the next step before going to court is sending a formal Letter Before Action (LBA). This is a written demand giving your client a final deadline (usually 14 days) to pay, with a warning that you will issue county court proceedings if they don’t.
PennyFetch Pro can automatically generate Letters Before Action with the correct legal language, statutory interest breakdown, and deadline calculations.
How the Late Payment of Commercial Debts Act calculator works
This statutory interest calculator uses the formula set out in the Late Payment of Commercial Debts (Interest) Act 1998. You enter the invoice amount and the date payment was due. The calculator works out how many days the invoice is overdue, applies the applicable statutory rate for the period when the debt became overdue, and adds the fixed compensation amount.
The statutory interest rate is set at 8% above the Bank of England base rate. The base rate used depends on when the debt became overdue: for debts arising between 1 January and 30 June, the rate from the previous 31 December applies. For debts arising between 1 July and 31 December, the rate from the previous 30 June applies.
Statutory interest is an automatic right for business-to-business transactions in the UK, unless your contract already specifies a different interest rate or late payment remedy. Most freelancers do not know about it, or feel awkward claiming it. But the law is clear: if they pay late and your contract does not say otherwise, you are owed interest. This does not apply to consumer debts.
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This calculator is for guidance only and does not constitute legal advice. Source: GOV.UK: Late commercial payments, charging interest and debt recovery
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