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How to Auto-Charge Bank of England Interest on Late Invoices
5 Min Read
June 22, 2026
Co-founder & CEO of Paidnice
If you invoice other UK businesses, you can charge statutory interest on late payments at the Bank of England base rate plus 8% a year. The catch is that the base rate keeps moving, and a single overdue debt can span several changes. Tracking that by hand is exactly the kind of job that quietly gets dropped.
The short version: you can auto-charge Bank of England interest on overdue invoices by connecting Paidnice to Xero or QuickBooks. It tracks the live base rate, adds the statutory 8%, and prorates the interest across every rate change, automatically. This applies to UK business-to-business invoices; statutory interest does not apply to consumer debts, and Paidnice works with Xero and QuickBooks Online.
Key takeaways
The rate is base rate plus 8%.UK B2B invoices can carry statutory interest of the Bank of England base rate plus 8% a year, plus fixed compensation per invoice.
It is split and prorated.The base rate moves, so a debt overdue across changes is split and charged at the rate in force in each period.
Paidnice keeps it correct.Paidnice tracks the live rate and charges the right prorated interest on every overdue invoice, with a full audit trail.
Why charging Bank of England interest by hand is painful
The statutory rate is not a fixed number you can set and forget. It moves with the Bank of England base rate, and the legal mechanism fixes that rate in six-month windows, a detail buried in the legislation. When a debt stays overdue across one or more rate changes, doing it properly means splitting the debt at each change and charging the rate that applied at the time. Our guide to UK late payment fees covers the legal side in full.
Here is what that looks like on a year-old debt.
Interest, prorated across every rate change
Picture a £10,000 invoice that stays overdue for a year while the Bank of England base rate moves three times. Charging the right interest means splitting the debt at each change and applying the rate that was in force at the time. Paidnice does this automatically.
Overdue dateToday
12.25%base 4.25% + 8%120 days£402.74
12.00%base 4.00% + 8%90 days£295.89
11.75%base 3.75% + 8%155 days£498.97
Total interest on the £10,000 debt£1,197.60
Illustrative example using sample base rates, not the current rate. For the live figure, use the UK statutory interest calculator or check the current Bank of England base rate. Each period is charged at the rate that applied at the time, prorated by the day. You never touch a spreadsheet or watch the Bank of England for changes.
How Paidnice auto-charges Bank of England interest
Paidnice does the tracking, the maths and the charging for you:
- Connect Xero or QuickBooks in one click, so Paidnice can see your overdue invoices.
- Set your interest rule to the Bank of England base rate plus 8% (or any rate you choose).
- Paidnice tracks the live base rate and indexes your charge to it, with no manual updates.
- Interest is charged automatically on every overdue invoice, prorated across each rate change while the debt is outstanding.
Manually vs on autopilot
Charging Bank of England interest correctly is fiddly to do yourself and trivial to automate. Here is the difference.
Doing it by hand
- Watch the Bank of England for every base-rate change
- Recalculate the daily rate each time it moves
- Split each debt at every rate change and prorate it
- Repeat for every overdue invoice, every month
- Risk charging the wrong rate, or giving up entirely
With Paidnice
- Tracks the live Bank of England base rate for you
- Applies base rate plus 8% automatically
- Prorates across every rate change while a debt is overdue
- Charges interest on every overdue invoice, consistently
- Always the correct rate, with a full audit trail
It stays correct without you touching it
Because the rate is indexed to the live Bank of England base rate and prorated by the day, your charges stay right as the rate moves, and every action is logged for a clean audit trail. If you want to sense-check a figure yourself, our free UK statutory interest calculator applies base rate plus 8% to any invoice, and the support article on Bank of England interest explains the proration in detail.
Auto-charging Bank of England interest: FAQ
What interest can I charge on overdue B2B invoices in the UK?
Statutory interest on late commercial payments is 8% per year above the Bank of England base rate. You can also claim fixed compensation per invoice on top of the interest. Our guide to late payment fees in the UK covers the detail.
Can I automatically charge Bank of England base rate interest?
Yes. Paidnice tracks the Bank of England base rate, adds the statutory 8%, and charges interest on your overdue invoices automatically, so you never have to look the rate up or recalculate it by hand.
What happens if the base rate changes while an invoice is still overdue?
Paidnice prorates the interest across each rate change. A debt that spans several base-rate moves is split by period and charged at the rate that applied at the time, then totalled, all automatically.
Does Paidnice update the Bank of England rate automatically?
Yes. The rate is indexed to the live Bank of England base rate, so your interest charges stay correct as the rate moves, without any manual updates from you.
How do I work out the interest myself?
You can use our free UK statutory interest calculator to work out the interest and compensation on any overdue invoice. It applies the current base rate plus 8% for you.
Does this work with Xero and QuickBooks?
Yes. Paidnice connects to both Xero and QuickBooks Online and applies your interest rules to overdue invoices automatically. See late fees and interest for how it works.
Keep reading
Guide
Add late payment fees in Xero
The manual methods, how much you can charge, and how to automate fees on overdue invoices.
Guide
Late payment fees in the UK
How much you can legally charge, the Act, and the 2026 reforms.
Free tool
UK statutory interest calculator
Work out base rate plus 8% interest and compensation on any invoice.
Guide
Automate statement sending in Xero
Schedule statements, filter by balance, and send to company groups.
Feature
Late fees & interest
See how Paidnice applies and sends late fees and interest automatically.
The bottom line
Charging Bank of England interest correctly means following a rate that changes and prorating it across the life of each debt. That is tedious by hand and automatic with Paidnice: it tracks the rate, adds the statutory 8%, and charges your overdue invoices for you.
On Xero or QuickBooks? Start a free trial of Paidnice and auto-charge the right interest, every time.
Co-founder & CEO of Paidnice
Denym is a software entrepreneur and writes about accounts receivables management for small business.
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