What interest can I charge on a late business invoice?

Statutory interest at 8% a year plus the Bank of England base rate, under the Late Payment of Commercial Debts (Interest) Act 1998. It is simple interest, worked out daily. Your contract can replace statutory interest only if it gives you a substantial remedy for late payment (sections 8 and 9); a term that just excludes or waters it down is void.

Can I claim compensation as well as interest?

Yes. Section 5A of the 1998 Act adds a fixed sum on top of the interest: £40 for a debt under £1,000, £70 for £1,000 up to £9,999.99, and £100 for £10,000 or more. You can charge it once for each payment. If your reasonable costs of recovering the debt are higher than the fixed sum, section 5A(2A) lets you claim the difference too.

Which Bank of England base rate applies?

Not the rate on the day you work it out. It is the base rate in force on 31 December for interest that starts to run between 1 January and 30 June, or on 30 June for interest that starts to run between 1 July and 31 December. That rate then stays fixed for the whole debt.

When does an invoice count as late?

Statutory interest starts the day after the agreed payment date. If you agreed longer terms, section 4 of the Act can bring that start forward. For a public authority customer, interest starts from day 30 even if longer terms were agreed (or, for an advance payment, from when the debt is created, section 4(2G)). For a business customer, interest runs from day 60 instead of a later agreed date, but the later date still stands if it is not grossly unfair to you (section 4(2F)). The days are counted from when you deliver or the customer gets the invoice, whichever is later. Where the contract has an acceptance or verification procedure, the 30 or 60 days can run from when it is completed (section 4(5A) to (5D)). With no agreed date, interest starts after that 30-day period.

Does this apply to debts owed by consumers?

No. The 1998 Act applies only where both the supplier and the customer are acting in the course of a business. Consumer credit agreements are excluded.

Free tool

Late payment interest calculator

On a late business-to-business invoice, UK law entitles you to interest at the Bank of England base rate plus 8%, plus fixed compensation of £40-£100 depending on the debt size. This calculator works out both from your invoice amount and due date.

Figures last reviewed 27 September 2026

Checking the Bank of England base rate...

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How this is calculated

Under the Late Payment of Commercial Debts (Interest) Act 1998, a business that is paid late by another business can claim statutory interest at 8% a year plus the Bank of England base rate. It is simple interest, worked out daily, starting the day after the payment was due.

The base rate that counts is fixed by the date interest starts to run: the rate in force on 31 December for interest starting between January and June, or on 30 June for interest starting between July and December. Section 5A of the Act adds a fixed sum on top of the interest, banded by the size of the debt: £40, £70 or £100.

Worked example. A £2000.00 invoice is 60 days overdue. Assuming a Bank of England base rate of 3.75%, statutory interest runs at 11.75% a year, which is about £0.64 a day. That comes to £38.63 interest, plus £70.00 fixed compensation for a debt of £1,000 to £9,999.99, making £2108.63 in total including the invoice itself.

Sources

This tool is an illustration, not advice. Check your figures against the sources above, or ask your accountant, before relying on them.

Free tool

Late payment interest calculator

Figures last reviewed 27 September 2026

Checking the Bank of England base rate...

Embed this calculator on your own site:

<iframe src="https://templio.co.uk/embed/tools/late-payment-interest-calculator" width="100%" height="480" style="border:0" title="Calculator by Templio"></iframe><p><a href="https://templio.co.uk/tools/late-payment-interest-calculator">Late payment interest calculator by Templio</a></p>

How this is calculated

Sources

This tool is an illustration, not advice. Check your figures against the sources above, or ask your accountant, before relying on them.

Late payment interest calculator

How this is calculated

Sources

Questions about the late payment interest calculator.

Late payment interest calculator

How this is calculated

Sources

Questions about the late payment interest calculator.