Late payment interest calculator
If a business customer pays you late, UK law lets you claim interest at 8% above the Bank of England base rate plus a fixed compensation sum. Work out exactly what you're owed.
Use the base rate on 30 June if interest starts July–December, or on 31 December if it starts January–June (interest starts the day after payment was due). It was 3.75% on 30 June 2026 — check the current rate on the Bank of England website. General information, not legal advice.
How statutory late payment interest works
The Late Payment of Commercial Debts (Interest) Act 1998 applies when one business pays another late. You can claim:
- Interest at 8% a year above the Bank of England base rate, from the day after the due date until it's paid
- Fixed compensation of £40 (debts under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more)
If you didn't agree payment terms, payment is due 30 days after the customer received your invoice. Read the full guide: charging interest on late payments.
Rather not chase at all?
PaySorted sends polite reminders by email and text before and after the due date, and stops the moment your customer pays. Most late invoices are paid after a reminder or two — long before interest is needed.
Questions
How do I calculate late payment interest?
Multiply the amount owed by the annual rate (8% plus the base rate), then by the number of days late, and divide by 365. Add the fixed compensation of £40, £70 or £100.
What base rate should I use?
The base rate on 31 December for interest that starts between January and June, or on 30 June for interest that starts between July and December. Interest starts the day after payment was due.
Can I charge late payment interest to a homeowner?
Not under the statutory scheme — it's business-to-business only. You can only charge a private customer interest if your terms said so before the work.
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