Late payment interest calculator

What you are entitled to

The Late Payment of Commercial Debts (Interest) Act 1998 gives every business a statutory right to charge interest on an overdue commercial debt. It applies automatically. Nothing needs to be in the contract, and the customer cannot opt out of it unless the contract provides its own substantial remedy for late payment.

Two separate amounts are due. Interest runs at the Bank of England base rate plus 8 percentage points — base rate is 3.75% as at 30 July 2026, so 11.75% a year — accruing daily from the day after payment fell due. On top of that sits a one-off fixed compensation sum, banded by the size of the debt, which you can claim without proving any loss.

Fixed compensation bands

• £40 — debt under £1,000
• £70 — debt of £1,000 to £9,999.99
• £100 — debt of £10,000 or more

The band is set by the size of the individual unpaid invoice, and the sum is charged once per invoice. Five overdue invoices means five compensation payments, not one.

When the clock starts

Count from the day after payment was due, not from the date on the invoice. Where the contract sets a payment period, that governs — but between businesses it cannot run beyond 60 days unless the longer term was expressly agreed and is not grossly unfair to you. Where nothing was agreed at all, the default is 30 days from the later of the customer receiving the invoice or you finishing the work.

Charging it is optional

Most tradespeople never actually pursue the interest. That is fine — it is a right, not a duty. What changes behaviour is putting the number in front of the customer. A chase letter that says the invoice is now worth a specific, larger, legally supportable figure lands differently from one that asks politely for a second time.

The practical guide to doing that is in what to do about an unpaid invoice, and getting paid the same day covers the part that stops the problem starting.

Guidance, not legal advice. Base rate 3.75% and the compensation bands verified against GOV.UK and Bank of England figures as at 30 July 2026. Base rate moves — re-check before you rely on a figure in a formal demand.