Work out exactly what a late customer owes you.
If a business customer hasn't paid your invoice on time, the law already gives you the right to add interest, plus a fixed fee, without going anywhere near a court. Put your numbers in and we'll work out precisely what that's worth.
The bit almost every other calculator gets wrong: the interest rate isn't today's Bank of England base rate. It's whatever rate was locked in on the 30 June or 31 December before your invoice went overdue, and it stays locked at that rate for as long as the debt sits unpaid. Ours uses the correct locked rate for your actual dates.
LATE PAYMENT INTEREST CALCULATOR
Uses the actual locked reference rate for your dates, not today's rate
Enter the due date to see what you're owed.
An estimate to help you work out what you're owed, not legal advice. Simple daily interest, 365-day year. Confirm anything contested with a solicitor or gov.uk.
The bit gov.uk's own guidance skips
How the interest rate is actually worked out.
Statutory interest is 8% a year on top of the Bank of England base rate (the law calls this the “official dealing rate”). That much most sources get right. What they miss: the base rate used isn't the one in force today. Under the Late Payment of Commercial Debts (Rate of Interest) Order 2002, the rate is locked twice a year, on 30 June and 31 December, and whichever one applied immediately before your invoice went overdue is the one you use for the entire time it stays unpaid, even if the Bank of England changes the base rate again, and even if the debt runs past the next 30 June or 31 December.
Even the Small Business Commissioner's own calculator states “8% plus the Bank of England base rate” without saying which date's rate that is, and gov.uk's guidance links straight to “check the current base rate,” which is a different figure to the one the law actually requires once an invoice has been sitting unpaid a while. Here are the locked rates our calculator draws from:
| Locked on | Base rate | Statutory rate (+8%) | Governs interest starting |
|---|---|---|---|
| 30/06/2023 | 5% | 13% | 1 Jul 2023 to 31 Dec 2023 |
| 31/12/2023 | 5.25% | 13.25% | 1 Jan 2024 to 30 Jun 2024 |
| 30/06/2024 | 5.25% | 13.25% | 1 Jul 2024 to 31 Dec 2024 |
| 31/12/2024 | 4.75% | 12.75% | 1 Jan 2025 to 30 Jun 2025 |
| 30/06/2025 | 4.25% | 12.25% | 1 Jul 2025 to 31 Dec 2025 |
| 31/12/2025 | 3.75% | 11.75% | 1 Jan 2026 to 30 Jun 2026 |
| 30/06/2026 | 3.75% | 11.75% | 1 Jul 2026 to 31 Dec 2026 |
Source: Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 (SI 2002/1675), Article 4, and Bank of England Monetary Policy Summary decisions on each lock date.
On top of interest, not instead of it
The £40, £70 or £100 you can add on top.
As well as interest, the law entitles you to a fixed compensation sum, once per invoice, no need to ask for it or prove anything cost you money first. The amount is set by the size of the debt:
| Debt size | Fixed compensation |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Source: Late Payment of Commercial Debts Act 1998, s.5A, amounts fixed by the Late Payment of Commercial Debts Regulations 2013.
The point almost every calculator skips
Can you claim more than the fixed sum?
Yes. If it genuinely cost you more than the fixed £40, £70 or £100 to recover the debt, a solicitor's letter, a debt collection agency's fee, real admin time spent chasing it, the law entitles you to claim the difference as well, provided the extra cost was reasonable. It is not a blank cheque for every hour spent worrying about it, but a real letter-before-action fee that came to £150 on a small debt is a genuine claim on top of the £40 fixed sum, not instead of it.
Only one source in the whole SERP for this topic, gov.uk itself, states this plainly. Every commercial calculator we looked at either leaves it out entirely or mentions “recovery costs” too vaguely to act on.
Before you calculate anything
When does a debt legally become “late”?
If you and your customer agreed a payment date, that's the date that matters, interest starts running the day after it. If nothing was agreed, the law sets a default: 30 days after the later of you finishing the job or delivering the goods, or your customer receiving the invoice, whichever comes second.
A public authority customer can't lawfully agree to anything longer than that 30-day default, no matter what the contract says. A private business can agree up to 60 days, and even longer only where that's genuinely fair to you as the supplier, not a term written purely to push the clock out.
One more point almost nobody states plainly: neither the interest nor the fixed compensation sum is subject to VAT. You don't add VAT to either figure when you invoice for it.
The get-out clause customers try
Can their contract override this?
Sometimes. A contract can set a different interest rate or payment period, but only where it gives you a genuine, substantial alternative remedy for being paid late. A clause that simply says “no interest is payable on late payment,” or sets a token rate designed purely to dodge the statutory one, is void, you can still claim the statutory rate regardless of what the paperwork says.
It also cuts the other way on partial payment. If your customer pays part of what they owe, the law applies that payment to interest and compensation first and the original debt last, so interest keeps accruing on more of the balance for longer than most people assume.
Once you've got the number
What to do next.
Send the total, interest plus compensation, alongside a clear, polite chase referencing the Late Payment of Commercial Debts Act 1998. Most customers pay up once they see you know your rights and have put a real figure on it.
If that's ignored, a formal letter before action is the next rung, and small claims court, up to £10,000 in England and Wales, is the last resort if it still goes nowhere. Going to court is rarely necessary; showing you know the exact number and are prepared to escalate does most of the work on its own.
The rest of running the business properly
Getting paid is one square on the board.
Chasing what you're owed properly is the same kind of job as the rest of your admin, easy to put off, expensive when it slips. If your books need sorting for Making Tax Digital first, that's the real thresholds and deadlines. And if you're carrying real liability risk on a job that goes wrong as well as a customer who won't pay, it's worth checking what insurance do tradesmen actually need covers you properly too.
Straight answers
Questions people actually ask.
- How is the late payment interest rate actually calculated? Is it today’s Bank of England base rate?
- No, and this is the thing almost every other calculator gets wrong. The rate is the Bank of England base rate that was locked in on the 30 June or 31 December immediately before your interest started running, fixed at 8% above that rate for the entire time the debt stays unpaid. It does not float with later Bank of England changes, and it does not reset if the debt happens to run past the next 30 June or 31 December.
- Can I charge the £40, £70 or £100 as well as interest, not instead of it?
- Yes. The fixed sum is on top of statutory interest, once per invoice, banded by the size of the debt: under £1,000 is £40, £1,000 to £9,999.99 is £70, and £10,000 or more is £100.
- Can I claim more than the fixed sum if it actually cost me more to chase the debt?
- Yes. If your reasonable costs of recovering the debt, a solicitor’s letter or a debt collector’s fee, for example, come to more than the fixed sum, the law entitles you to claim the difference as well.
- My customer’s terms say 60 or 90 days. Does the statutory rate still apply?
- A contract can set a different payment period or interest rate, but only where it provides a genuine substantial remedy for late payment. A one-sided term written purely to avoid paying statutory interest can be challenged and is void. A public authority customer cannot lawfully agree a period longer than 30 days at all.
- Do I have to add the interest myself, or does it happen automatically?
- It does not apply itself. You calculate it and claim it, typically by raising a further invoice or adding it to a follow-up letter once the original debt is settled or being chased.
- Do I charge VAT on the interest and compensation I add?
- No. Statutory interest and the fixed compensation sum are both outside the scope of VAT, so you do not add VAT to either. Check the specific treatment with your accountant if the invoice is otherwise unusual.
- What if my customer pays part of the invoice? Does interest still apply to the full amount?
- A part-payment is applied to the interest and compensation first and the original debt last, so interest keeps accruing on more of the balance for longer than most people expect.
- Does this apply if I’m a sole trader, not VAT registered, on my own?
- Yes. The Late Payment of Commercial Debts (Interest) Act 1998 applies to any business-to-business debt regardless of size or VAT status. It does not apply to a consumer debt.
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