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 base rate for your period 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.

Use the right base rate, not today's rate. The statutory rate is fixed twice a year, so you need the base rate in force on the last 30 June or 31 December before the debt became overdue. The calculator reads your invoice due date and tells you which reference date applies. You can look up any historic figure in the Bank of England base rate history.

1. Find the base rate. Use the Bank of England base rate in force on the last 30 June or 31 December before the debt became overdue. The statutory rate is fixed for six months at a time: the rate on 31 December applies to debts becoming overdue between 1 January and 30 June, and the rate on 30 June applies between 1 July and 31 December. It does not change over the life of the debt, and it is not today's rate.
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. Do not add VAT to statutory interest or to the fixed compensation. Neither is payment for a supply of goods or services; both are compensation for being paid late, so they sit outside the scope of VAT rather than being a zero-rated or exempt supply. Show them as separate lines on the invoice with no VAT applied.

The reverse trips people up more often: the amount you charge interest on does include VAT. If you invoiced £1,000 plus £200 VAT, the debt is £1,200 and interest runs on the full £1,200. A charge you add beyond the statutory compensation, such as a contractual administration fee, may be a supply in its own right, so check the treatment with your accountant.

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.

Yes. Interest and compensation are claimed on the gross amount the customer failed to pay, VAT included. If your work came to £1,000 and you added £200 of VAT, the debt is £1,200 and both the interest and the compensation tier are worked out on £1,200. The Small Business Commissioner's own interest calculator applies the same rule.

This can push an invoice into a higher compensation band. A net £950 invoice is £1,140 with VAT, which moves it from the £40 tier to the £70 tier.

Interest runs on whatever is still unpaid, so enter the outstanding balance rather than the original invoice value. If a customer paid £4,000 of a £10,000 invoice, put £6,000 in the calculator and count the days from the due date.

Where a part payment arrived partway through, split the debt into two lines: the full amount for the days before the part payment, then the remaining balance for the days after. Add an invoice row for each period and the results panel totals both. The fixed compensation is claimed once per invoice, not once per period, so apply it to only one of the two rows.

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.