Late Payment Interest Calculator: UK Rate and Fixed Fee

Rate and Fee

When another business pays you late, you can charge statutory interest, which is interest set by law. It is 8% a year on top of the Bank of England's Bank Rate, worked out as simple interest by the day. Bank Rate was 3.75% on 30 June 2026, so an invoice that falls late between 1 July and 31 December 2026 carries 11.75% a year. You can also claim a fixed fee of £40, £70 or £100, depending on the size of the invoice.

Calculator

Enter the invoice total, the date it was due and the date it was paid. Leave the paid date as today if it is still unpaid.

The sentence under the results is ready to paste into a chasing letter. This is general information, not legal advice. GOV.UK's guide to late commercial payments is the official source.

Rules

The law is the Late Payment of Commercial Debts (Interest) Act 1998, often called the Late Payment Act. It applies to a contract for goods or services where the buyer and the seller are each acting in the course of a business. A sole trader buying for their business counts. A customer buying for themselves does not, so you cannot use it against a consumer. Consumer credit agreements are left out, and so are contracts that work as a mortgage, pledge, charge or other security.

Your contract can set its own late payment terms, with a limit. GOV.UK says you cannot claim statutory interest if your contract has a different rate. The Act says a term that removes interest is void unless it gives a substantial remedy, and section 9 explains when a remedy counts as substantial. Read your contract before you claim.

Rate

GOV.UK describes the rate as 8% plus the Bank of England base rate. The rate order is more exact. It uses Bank Rate on one of two reference dates, the 30 June or 31 December before the day interest starts. The Scottish Order, SSI 2002/336, says the same. The Small Business Commissioner, an independent public body set up by government, uses the same two dates.

We read these off the Bank's own Bank Rate history on 2 November 2026. The rate for an invoice that falls late from 1 January 2027 depends on Bank Rate on 31 December, so nobody knows it yet.

Our calculator fixes one rate for the whole debt, using the reference date before interest starts, because that is what the order says. The Small Business Commissioner's calculator does the same, going by its published code.

Start Date

If you agreed a payment date, interest starts the day after it. If you agreed none, the Act counts 30 days beginning with the day the customer gets the invoice or you deliver the work, whichever is later, and interest starts the day after those 30 days end. GOV.UK puts it as late 30 days after that day. Enter the agreed date as the due date. With no agreed date, enter the day before interest starts, which is that day plus 29 days.

If the buyer is a public authority, interest starts after 30 days whatever longer date you agreed. For other buyers, agreed terms longer than 60 days are allowed unless they are grossly unfair to the supplier. An unfair term can be cut back to 60 days, which the calculator does not model.

Interest is simple, so it is never added to itself. It builds until you are paid, and the Commissioner says you can charge it for up to 6 years from the day after the payment terms end.

Fixed Fee

The fixed fee depends on the size of the invoice. GOV.UK and the Act give the same bands.

You can only charge it once for each payment, so each late invoice has its own fee. If the fee does not cover your reasonable costs of recovering the debt, the Act lets you claim the difference too. Keep receipts for any costs you want to claim.

Work interest and the fee on the whole invoice, VAT included. The Commissioner's example is a £1,000 job with £200 VAT, where interest runs on £1,200. HMRC's guidance says interest paid because of late payment is outside the scope of VAT, so you do not add VAT on top of it.

Example

An invoice for £3,600, VAT included, was received on 10 July 2026, with an agreed payment date of 9 August 2026. Interest starts on 10 August. It is still unpaid on 30 October 2026. We worked these figures out in code, not by hand.

1. Rate. Bank Rate on 30 June 2026 was 3.75%. Add 8% for 11.75% a year.
2. A year. £3,600 × 11.75% is £423.00.
3. A day. £423.00 ÷ 365 is £1.1589, about £1.16. GOV.UK uses 365 days.
4. Days late. 9 August to 30 October is 82 days.
5. Interest. 82 × £1.1589 is £95.03.
6. Fixed fee. £3,600 sits in the £1,000 to £9,999.99 band, so £70.

You can claim £165.03, so £3,765.03 is owed in total. GOV.UK's own example rounds the daily figure to the penny first, which would make the interest £95.12 here. We round once, at the end.

Claiming

GOV.UK says to send a new invoice if you decide to add interest to the money you are owed. The Commissioner adds that the new invoice should show the amount owed and a payment due date and name the unpaid invoice.

1. Work out the interest and fee with the calculator.
2. Raise a separate invoice, dated the day you send it, with one line for interest and one for the fixed fee.
3. Name the original invoice number and its due date on it.
4. Send it with a short note. For example: "We are claiming statutory interest and the fixed fee on invoice 1042, due 9 August, under the Late Payment of Commercial Debts (Interest) Act 1998. Please pay by the date shown."
5. Carry on chasing. Our guide to chasing an unpaid invoice has the schedule, and a letter before action is the step before a court claim.

You cannot add interest to the interest invoice: the Commissioner says you can only charge on the original invoice. It also says you cannot charge on an invoice paid late because of a dispute. That is its reading, so ask a solicitor if the customer disputes the work.

The Commercial Payments Bill is proposed and is not law. It has passed the House of Lords and had its first reading in the Commons on 21 October 2026, and its second reading in the Commons has no date yet. The Small Business Commissioner describes the proposals as a 60 day maximum payment term for large businesses paying smaller suppliers and interest that would become mandatory, and says details may change. Everything on this page is the law today.

Tunewell

You can do all of this with the free calculator and a new invoice. The chasing before it is what costs time. The Invoices Chased item on our Automation Menu sends polite reminders on a schedule until you are paid, and it is one of the three Quick Wins you can choose with a Check-Up. The interest and fee stay a step you take with this calculator.

A Check-Up is £495 for businesses of up to 10 staff, and a Full Review is £995 for 11 to 30 staff: see Pricing. The Check-Up gives you one clear answer on which tools to use and which to skip, and we take no commission from any tool.