UK Statutory Interest Calculator

The statutory interest rate on late commercial payments is 8% a year plus the Bank of England base rate. The 8% is fixed in law; the base rate changes when the Bank's Monetary Policy Committee meets.

Enter the current base rate in the calculator above. It adds the 8%, converts the total into a daily rate, applies it across the days each invoice is overdue, and adds the fixed compensation per invoice. The base rate moves periodically, so check the current Bank of England base rate before you calculate.

1. Find the base rate. Use the Bank of England base rate that applied on the day the payment became overdue.
2. Add 8%. This gives your annual statutory rate.
3. Work out the daily rate. Divide the annual rate by 365.
4. Apply it. Multiply the overdue amount by the daily rate, then by the number of days the payment is late.

The 3.75% base rate shown here is the rate at the time of writing, so check the latest figure before relying on it.

On a business-to-business invoice you can charge two things: statutory interest at the Bank of England base rate plus 8% a year, and a fixed late payment compensation fee per invoice. You can charge a different rate if your contract sets one out, as long as it is a substantial remedy for late payment rather than a penalty. Statutory interest does not apply to consumers; these rules cover commercial transactions.

On top of interest, you can claim a fixed sum towards the cost of recovering the debt. The amount depends on the size of the invoice:

This compensation is per invoice, not per customer. If a customer has five overdue invoices, you can claim the relevant fee on each one.

Yes, for commercial invoices. The Late Payment of Commercial Debts (Interest) Act 1998 gives you an automatic right to interest and a fixed compensation fee on overdue business invoices, whether or not your contract mentions it. Charging late fees to consumers is governed by different rules and your agreed terms, so the statutory rate does not apply there.

For UK commercial invoices, the statutory benchmark is the Bank of England base rate plus 8% a year, which works out at roughly 11 to 12% a year at recent base rates, charged daily on the overdue amount. A flat one-off fee such as 10% of the invoice is common in contracts, but it has to reflect a genuine cost of late payment to be enforceable; a fee set purely to punish the customer can be challenged as a penalty. The statutory rate is the safest basis, and it is what this calculator uses.

A payment is late the day after the agreed due date, and your right to claim interest and compensation starts from that point. If you did not agree a payment date, the debt becomes late after the earlier of:

• 30 days from delivering the goods or service
• 30 days from telling the customer what they owe

No. Statutory interest and compensation are your right, not an obligation. You can decide whether to apply them, and you can still claim on an overdue invoice even if you did not mention interest at the time. Many businesses use the entitlement as a prompt for payment rather than always enforcing it in full.

It is simple interest. It accrues daily on the overdue amount and does not compound, so you do not charge interest on interest that has already built up. The calculator above uses simple daily interest, in line with the legislation.

Yes. The statutory right applies automatically to business-to-business contracts unless your contract already provides a substantial remedy for late payment. If your terms are silent on late payment, the statutory rate of base rate plus 8% applies by default.

1. Raise a new invoice or statement showing the original amount, the interest, and the compensation fee.
2. Show your workings, including the rate, the daily figure, and the days overdue.
3. Reference the legislation: the Late Payment of Commercial Debts (Interest) Act 1998.
4. Set clear payment terms for the new total.

You can copy ready-made line items straight from the results above. Paidnice can also apply statutory interest and fees to overdue invoices automatically in Xero and QuickBooks.

No. Statutory interest charged under the Late Payment legislation is exempt from VAT, so you should not add VAT to the interest portion of your invoice. A separate administration fee beyond the statutory compensation may be subject to VAT if you are VAT-registered.

Yes. To calculate interest for a single month, set the payment date one month after the due date and the calculator shows the interest for that period. You can copy the interest figure or the full line items above and paste them into Excel, Google Sheets or your invoicing tool to keep your own record.

If you need to work out late payment interest for jurisdictions outside the UK, or want more control over the terms, try our global late payment interest calculator or the EU Late Payment Directive calculator.