SamFree tool · no signup
Late payment interest calculator (UK)
A business customer who pays late owes you interest and a fixed sum on top. See how much, to the penny.
Under the Late Payment of Commercial Debts Act, a business can charge another business 8% a year above the Bank of England reference rate on a late invoice, plus fixed compensation of £40, £70 or £100, depending on the amount. Interest runs from the day after the due date.
Interest started in July to December 2026, so the law fixes the reference rate at the Bank Rate on 30 June 2026: 3.75%. Bank Rate today is 4.00%, but it doesn't change the rate on this invoice.
Get paid without chasing
Sam sends invoices and polite, automatic reminders for every unpaid one, including invoices from Xero, QuickBooks, FreeAgent and Sage.
Start freeHow it works
Under the Late Payment of Commercial Debts (Interest) Act 1998, you can claim simple interest at 8% a year above the Bank of England base rate on a late business invoice, plus fixed compensation.
Interest = invoice amount × (8% + reference rate) ÷ 365 × days overdue
The reference rate is not today's Bank Rate. The law fixes one for each half-year: the Bank of England Bank Rate on 31 December for interest that starts January to June, and on 30 June for July to December. Interest starts the day after the due date, and the rate stays the same until the invoice is paid. Enter the due date and the calculator picks the right one from the Bank of England's data.
Bank Rate is 4% (Bank of England, 6 November 2026). Invoices falling due July to December 2026 use 3.75%, the Bank Rate on 30 June 2026, so interest runs at 11.75% a year.
Reference rates by half-year
| Invoice fell due | Reference rate | Interest a year |
|---|---|---|
| July to December 2026 | 3.75% (Bank Rate on 30 June 2026) | 11.75% |
| January to June 2026 | 3.75% (Bank Rate on 31 December 2025) | 11.75% |
| July to December 2025 | 4.25% (Bank Rate on 30 June 2025) | 12.25% |
| January to June 2025 | 4.75% (Bank Rate on 31 December 2024) | 12.75% |
| July to December 2024 | 5.25% (Bank Rate on 30 June 2024) | 13.25% |
| January to June 2024 | 5.25% (Bank Rate on 31 December 2023) | 13.25% |
| July to December 2023 | 5% (Bank Rate on 30 June 2023) | 13% |
| January to June 2023 | 3.5% (Bank Rate on 31 December 2022) | 11.5% |
Strictly, the half-year is the one interest starts in: an invoice due on 30 June starts accruing on 1 July, so it takes the 30 June rate.
Fixed compensation
| Amount owed | You can add |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Worked example
A £2,400 invoice fell due on 26 September 2026, 45 days ago. Interest started in July to December 2026, so the reference rate is 3.75% and interest runs at 11.75% a year, £0.77 a day: £34.77 so far. Add £70 fixed compensation and you can claim £104.77, so the customer now owes £2,504.77.
This is a guide, not legal advice. It covers business customers only.
Questions
Can I charge interest on a late invoice to a homeowner?
Not under the Late Payment Act: it only covers business-to-business invoices. With a homeowner you can only charge interest if your terms said so before the work started.
Do I need interest in my terms to claim it?
No. Statutory interest applies to business invoices automatically, unless your contract sets its own fair rate instead. It still helps to say so on your invoices and reminders.
Which Bank of England rate do I use?
The Bank Rate on the 30 June or 31 December before interest started, not the rate today. If Bank Rate changes while the invoice is unpaid, your rate stays the same.
When does interest start?
The day after the agreed due date. If no date was agreed, 30 days after the customer received the invoice or the work, whichever is later.
Is the fixed compensation per invoice?
Yes. £40 for invoices under £1,000, £70 from £1,000 to £9,999.99, and £100 from £10,000. You can claim reasonable recovery costs above that too.
Sam for your business: Garages and MOT centres · Plumbers · Electricians · Heating engineers · Roofers · Builders · all industries