Home › Free tools › Late payment interest calculator

Late payment interest calculator

Work out the statutory interest and the fixed debt recovery sum you can claim when another business pays you late, using the rate set by the Late Payment of Commercial Debts (Interest) Act 1998.

How the interest is worked out

For business-to-business debts, statutory interest is 8% a year plus the Bank of England base rate (GOV.UK). The base rate used is the one in force on 30 June for interest that starts running between 1 July and 31 December, or on 31 December for interest that starts between 1 January and 30 June (legislation.gov.uk). Bank Rate has been 3.75% since 18 December 2025 (Bank of England, checked 15 October 2026), so a debt that went late at any point in 2026 attracts interest at 11.75% a year.

GOV.UK's own example: £1,000 at 8.5% is £85 a year, about 23p a day, so £11.50 after 50 days. You divide the yearly figure by 365 and multiply by the days late. To claim it, send a new invoice that adds the interest (GOV.UK).

The fixed sum for recovery costs

On top of interest you can charge a fixed sum once per payment: £40 for debts up to £999.99, £70 from £1,000 to £9,999.99 and £100 for £10,000 or more. You can also claim reasonable costs each time you try to recover the debt (GOV.UK).

When a payment counts as late

If you agreed a payment date, it's late the day after that. Agreed terms should usually be no more than 60 days between businesses, or 30 days for public authorities. With no agreed date, payment is late 30 days after the customer gets the invoice or you deliver the work, whichever is later (GOV.UK).

For a step-by-step routine, read how to chase a late payment. To avoid it next time, see payment terms for trades. Chasing invoices is easier with an app that sends reminders: see Tradify vs Jobber, the invoicing tools, or price jobs properly with the quote and VAT calculator.

Questions

What is the statutory interest rate for late payment in 2026?

8% plus the Bank of England base rate on the reference date. Bank Rate was 3.75% on both 31 December 2025 and 30 June 2026, so it is 11.75% a year for debts that went late in 2026 (checked 15 October 2026).

Can I charge late payment interest to a homeowner?

No. The Late Payment of Commercial Debts (Interest) Act covers business-to-business transactions. For consumers, rely on what your terms say.

Can I use a different rate?

Yes, if it's in your contract. GOV.UK says you can't claim statutory interest if a different rate is in the contract.

How much is the fixed compensation?

£40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, charged once per payment.