Late payment interest calculator (UK)
If a business customer pays an invoice late, UK law lets you charge statutory interest plus a fixed compensation fee under the Late Payment of Commercial Debts (Interest) Act 1998. Whether you know it as a late payment calculator, a late payment fees calculator, or a late payment of commercial debts calculator, it does the same job: enter the invoice details below to see exactly what you can claim.
How late payment interest works
The Late Payment of Commercial Debts (Interest) Act 1998 applies to invoices between businesses (it does not apply to consumers). When a payment is late you can charge:
- Statutory interest - the Bank of England base rate plus 8%, applied to the overdue amount for each day it is late.
- Fixed compensation - a one-off sum per invoice to cover the cost of chasing.
You can claim these even if you did not mention them on the invoice. Many freelancers and small studios never do - but the right to is there, and a polite reminder that interest is accruing often gets an invoice paid faster. For the full rules on what you can charge, see our guide to late payment fees and interest in the UK.
Late payment compensation: the fixed fees
The fixed compensation is set by the size of the debt:
| Amount owed | Fixed compensation you can charge |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
This is per invoice, not per reminder - and if your reasonable costs of recovering the debt are higher than the fixed sum, the Act lets you claim the difference on top.
A worked example
Say a business client owes you a £1,500 invoice that is 30 days overdue, and the Bank of England base rate is 4.5%:
- Statutory interest rate: 4.5% + 8% = 12.5% a year
- Interest so far: £1,500 x 12.5% x (30 / 365) = £15.41, accruing about 51p a day
- Fixed compensation: £70 (the £1,000 to £9,999.99 band)
- Total you can claim on top of the invoice: £85.41 and counting
The interest is rarely life-changing on its own - the point is the signal. Telling a late payer that statutory charges are now accruing, with the exact figure attached, moves an invoice up their pay list. Use the numbers in a payment reminder email or a formal chasing letter.
Frequently asked
Do I have to charge interest?
No - it is your choice. Plenty of people waive it to keep a good relationship, then mention it only if an invoice goes seriously overdue. The calculator just shows what you would be entitled to.
Does this apply to consumers?
No. The statutory interest and compensation here apply to business-to-business invoices. Different rules apply to consumers.
What date do I count from?
Interest runs from the day after payment was due. If you did not agree a payment date, the default is 30 days after the invoice or delivery.
What is the statutory interest rate right now?
Always the Bank of England base rate plus 8%. The base rate changes over time, so check the current figure at bankofengland.co.uk and enter it above - the calculator does the rest.
Is this the Late Payment of Commercial Debts (Interest) Act 1998 calculator?
Yes. Statutory interest, and the fixed compensation bands above, both come from the Late Payment of Commercial Debts (Interest) Act 1998 (as amended in 2002 and 2013). This calculator applies exactly those rules.
Can I add debt recovery costs too?
If your reasonable recovery costs exceed the fixed compensation - say a debt collection agency fee - the Act entitles you to the difference. Keep evidence of the costs.
What if they still don't pay?
Quote the figures in a firmer reminder, then escalate: a formal chasing letter, then a letter before action. See what to do when a client won't pay for the full path.
Stop doing this by hand
Badger chases your overdue invoices for you - polite at first, firmer over time, and it stops the moment you are paid. Your first chase is free.
Start chasing freeThis calculator gives an estimate for general guidance only and is not legal or financial advice. Statutory interest rules and the base rate change over time - check the current figures and your own circumstances, or speak to a professional, before relying on these numbers.