Late payment interest calculator
If a business customer pays you late, UK law lets you charge interest of 8% a year plus the Bank of England base rate, currently 11.75% for invoices that fell due in the second half of 2026, plus a fixed sum of £40, £70 or £100 depending on the size of the invoice. Put in the amount and the dates below and it does the sums.
This only works for business customers. The Late Payment Act does not cover a homeowner paying for work on their own home. If most of your work is domestic, read the section on that further down before you send anyone a bill with interest on it.
Excluding VAT is the usual basis, check your terms.
If no date was agreed, 30 days after the customer got the invoice.
Defaults to today if it is still unpaid.
Leave blank to use the Bank Rate for the right period.
Enter the date the invoice was due to see the result.
Arithmetic, not legal advice. Rates checked against the Bank of England and GOV.UK on 2026-10-19.
How it is worked out
Interest
interest = debt x annual rate / 365 x days late
The annual rate is 8% plus the base rate, so with a base rate of 3.75% it is 11.75%, or 0.1175 in the formula. It is simple interest, not compounded.
Fixed compensation
- Up to £999.99: £40
- £1,000 to £9,999.99: £70
- £10,000 or more: £100
Once per late payment, on top of the interest.
The base rate is the one in force on 31 December for interest that starts to run between 1 January and 30 June, and the one in force on 30 June for interest that starts between 1 July and 31 December. Interest starts to run the day after the payment was due. Once the half year has been set, a later change in the base rate does not alter it. Sources: GOV.UK on interest, the rate Order on legislation.gov.uk and the Bank of England Bank Rate page.
A worked example
You invoice a company £2,400.00 for a rewire, due on 1 September 2026. They pay on 1 October, which is 30 days late.
Interest started to run on 2 September, so the base rate comes from 30 June 2026, which was 3.75%. The annual rate is 8% + 3.75% = 11.75%.
- Daily interest: £2,400.00 x 0.1175 / 365 = £0.77
- Interest for 30 days: £23.18
- Fixed compensation for a debt of £1,000 to £9,999.99: £70.00
- Total you can claim: £93.18
It is not life changing on one invoice, but it adds up across a year of slow payers.
Business customers and homeowners
Covered
Contracts for goods or services where the customer and you are each acting in the course of a business. That includes landlords and letting agents buying work for rental property as a business, housing associations, shops, offices, contractors and public bodies. A contract of employment is not covered.
Not covered
A homeowner paying for work on their own home. The Act applies where both sides are acting in the course of a business, and a consumer is not. For domestic jobs you can only charge interest if your terms and conditions said so clearly before the work began, and the terms have to be fair. Check the wording, and which kind of customer you really have, before you rely on this tool.
One more catch. If your contract already sets its own remedy for late payment, and it counts as a "substantial remedy", that replaces the statutory interest. A contract term that undercuts the statutory rate and is not a substantial remedy is void to that extent. Whether a particular clause is substantial is a question for a solicitor. See section 2 and section 8 of the Late Payment of Commercial Debts (Interest) Act 1998.
How to actually claim it
- Check the customer is a business and that your contract does not set a different late payment remedy.
- Work out the interest and the fixed sum for the days overdue, using the calculator above.
- Put it in writing. GOV.UK says to send a new invoice if you decide to add interest to the money you are owed. Show the original invoice number, the days late, the rate and the fixed sum as separate lines.
- Say when the new total is due and what you will do next if it is not paid. Interest keeps building each day until the original debt is settled, so you can send an updated figure.
- If they still do not pay, GOV.UK points to the money claim process for taking it to court.
The full steps are in the GOV.UK guide to late commercial payments, and the fixed sums are on its recovery costs page.
Base rate used for each due date
The calculator picks the row where the day after your due date falls. Bank Rate figures are from the Bank of England, checked 2026-10-19.
| Interest starts to run | Bank Rate read on | Bank Rate | Statutory 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% | 13.00% |
| 1 January 2023 to 30 June 2023 | 31 December 2022 | 3.5% | 11.50% |
| 1 July 2022 to 31 December 2022 | 30 June 2022 | 1.25% | 9.25% |
| 1 January 2022 to 30 June 2022 | 31 December 2021 | 0.25% | 8.25% |
| 1 July 2021 to 31 December 2021 | 30 June 2021 | 0.1% | 8.10% |
| 1 January 2021 to 30 June 2021 | 31 December 2020 | 0.1% | 8.10% |
| 1 July 2020 to 31 December 2020 | 30 June 2020 | 0.1% | 8.10% |
| 1 January 2020 to 30 June 2020 | 31 December 2019 | 0.75% | 8.75% |
Common questions
How much interest can I charge on a late invoice in the UK?
If the customer is another business, the statutory rate is 8% a year plus the Bank of England base rate. For interest that starts to run between 1 July and 31 December 2026 the base rate used is the one in force on 30 June 2026, which was 3.75%, so the annual rate is 11.75%. On a £1,000 invoice that is about 32p a day. You can add a fixed sum on top of £40, £70 or £100 depending on the size of the debt.
Can I charge a homeowner interest on a late invoice?
Not under the Late Payment Act. It only covers contracts where both the customer and the supplier are acting in the course of a business, so a homeowner paying for work on their own house is outside it. You can still charge interest on a domestic customer if your written terms said so before the work started, but without that clause there is no statutory right to fall back on.
Do I have to charge the fixed compensation as well as interest?
No, both are things you are allowed to claim, not things you must. The fixed sum is £40 for a debt 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 late payment, and a supplier can claim reasonable costs of recovery on top.
When does an invoice count as late?
If you and the customer agreed a payment date, it is late the day after that date. If you did not agree one, it is late 30 days after the customer received the invoice or after you delivered the goods or finished the service, whichever is later. The agreed period is normally limited to 60 days for business customers unless a longer one is fair to both sides.
Which base rate do I use?
The Bank of England base rate in force on 31 December if the interest starts to run between 1 January and 30 June, or on 30 June if it starts between 1 July and 31 December. Interest starts the day after the due date. The rate is fixed for that half year even if the base rate moves, so the calculator picks the right one from the due date and lets you type your own if you need to.
Chasing invoices is the dull part
Most late payment is not a customer being awkward, it is an invoice nobody followed up. Gafferly chases overdue invoices automatically on the Crew plan and above, £49 per user per month, and customers pay by card through your own Stripe account.
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