Instantly calculate statutory interest and late payment compensation fees on business invoices under UK law using the latest Bank of England base rate.
Under The Late Payment of Commercial Debts (Interest) Act 1998, UK businesses are legally entitled to:
Note: This calculation is based on the statutory late payment legislation in the UK. You are legally entitled to charge both interest and compensation on late commercial payments.
To claim late payment interest and compensation, issue a separate invoice or include it with a statement.
This calculator provides an estimate based on the information provided. For exact figures, please consult a financial professional.
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Essential information about statutory interest and late payment compensation
The statutory interest rate for late payments in the UK is 8% plus the Bank of England base rate. The 8% is fixed by law, while the Bank of England base rate changes periodically.
To ensure you're using the current rate, check the official Bank of England base rate here.
Our calculator above allows you to input the current Bank of England base rate and automatically calculates the total statutory interest rate.
To calculate interest on a late payment in the UK, follow these steps:
Example calculation:
Our calculator above automates this entire process for you, even handling multiple invoices simultaneously.
In addition to interest, you can also claim compensation for the costs of recovering the debt. The fixed compensation amounts are:
| Amount of debt | What you can charge |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
These compensation amounts are per invoice, not per business or per debt collection effort. This means if you have five overdue invoices from the same customer, you can claim the compensation fee for each invoice separately.
A payment becomes late the day after its due date. The statutory right to claim interest and compensation starts from the day after the agreed payment date, or if there is no agreed payment date:
To claim statutory interest and compensation:
No, statutory interest charged under the Late Payment legislation is exempt from VAT. You should not add VAT to the interest portion of your invoice. However, if you charge a separate administration fee beyond the statutory compensation amount, this may be subject to VAT if you are VAT-registered.
If you need a more customizable late payment calculator that works for jurisdictions outside the UK or allows for more complex interest calculations, visit our global late payment interest calculator.
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