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Late payment interest calculator: how it works
It is simple interest: debt × (base rate + 8%) × days late ÷ 365. On a £4,800 invoice 60 days late with a 4% base rate, that is £4,800 × 12% × 60 ÷ 365 = £94.68.
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The statutory interest formula
Daily interest = debt × (base rate + 8%) ÷ 365. Interest = daily interest × days late. Days late run from the day after payment was due until the day it is paid.
| Debt | Days late | Rate | Interest | Compensation | Total claim |
|---|---|---|---|---|---|
| £750.00 | 30 | 12% | £7.40 | £40 | £47.40 |
| £4,800.00 | 60 | 12% | £94.68 | £70 | £164.68 |
| £25,000.00 | 90 | 12% | £739.73 | £100 | £839.73 |
How to use the late payment interest calculator
- Enter the unpaid invoice amount.
- Enter the date payment was due and the date it was paid (or today).
- Check the Bank of England base rate on the reference date, or switch to your contract rate.
- Read the interest, the fixed compensation and the total claim.
When payment is late
If no payment date was agreed, a payment is late 30 days after the customer received the invoice or the goods or services, whichever is later. Agreed terms between businesses can be up to 60 days, and longer only if that is not grossly unfair; public bodies must pay within 30 days.
Put your payment terms and a note about statutory interest on every invoice. It is often enough to get invoices paid on time.
Questions people ask
How is statutory late payment interest calculated?
It is simple interest: debt × (base rate + 8%) × days late ÷ 365. On a £4,800 invoice 60 days late with a 4% base rate, that is £4,800 × 12% × 60 ÷ 365 = £94.68.
Which base rate do I use?
The Bank of England base rate in force on the reference date: 30 June for debts that fell due between 1 July and 31 December, and 31 December for debts that fell due between 1 January and 30 June. It stays fixed for that debt even if the base rate changes.
How much fixed compensation can I claim?
£40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. You can also claim reasonable recovery costs above that amount.
Who can claim statutory interest?
Businesses (including sole traders) owed money by another business or a public sector body under a contract for goods or services. It does not apply to sales to consumers.
What if my contract sets its own late payment interest?
A contract can set its own rate, but it must be a substantial remedy. If it is not, the statutory rate applies instead. Use the contract rate option to calculate a contractual rate.