Late payment interest calculator

Statutory late payment interest is simple interest, worked out per day. The rate is 8% plus the Bank of England base rate on the reference date, and it stays the same for the life of that debt. To work it out by hand:

1. Find the reference date and the base rate on it (see the next section).
2. Add 8% to the base rate to get the yearly statutory rate.
3. Multiply the amount owed by that rate to get a year’s interest, then divide by 365 for the daily interest.
4. Multiply the daily interest by the number of days the payment is late.
5. Add the fixed compensation for the size of the debt.

Worked example. A business customer pays a £1,000 invoice 30 days late, and the interest started to run in 2026. The base rate on the reference date was 3.75%, so the statutory rate is 11.75% a year. A year’s interest is £117.50, which is about 32p a day, so 30 days comes to £9.66. The debt is between £1,000 and £9,999.99, so fixed compensation is £70, and the total claim is £79.66. The late payment interest calculator above does the same sum to the penny, using the unrounded daily figure.

Use the Bank Rate in force on 31 December for interest that starts to run between 1 January and 30 June, and the rate in force on 30 June for interest that starts between 1 July and 31 December. A later change in the base rate does not change the rate for a debt that is already late.

Bank Rate has been 3.75% since 18 December 2025 (Bank of England, checked 18 October 2026). It was 3.75% on both 31 December 2025 and 30 June 2026, so for interest that started to run at any point in 2026 the statutory rate is 11.75% a year. The calculator fills in the right rate for reference dates back to 30 June 2023. For anything else, it asks you to enter the rate from the Bank of England’s Bank Rate history.

Not statutory interest. The Late Payment of Commercial Debts (Interest) Act 1998 only applies where the buyer and the seller are both acting in the course of a business, so it covers business-to-business debts and not invoices to members of the public.

You can only charge a consumer interest if your contract with them says so, and that term has to be fair under consumer law. If a domestic customer has not paid, check your terms and take advice before adding interest.

• When the payment is late. Interest runs from the day after the agreed due date. With no agreed date, the payment is late 30 days after the customer received the invoice or the goods or services, whichever is later.
• Your contract. If your contract sets its own interest rate, you claim that rate instead of statutory interest.
• Compensation once per payment. The fixed sum is charged once for each late payment. You can also claim reasonable costs of recovering the debt.
• Tell the customer. Write to them with the amount owed, the interest, the compensation and how to pay. A pay link makes paying easy.

IBIOS Payments records deposits and balances against each job, with the provider and transaction reference, and gives managers a list of balances to chase. Pay by link is available through SumUp or Stripe, sent by your staff. Automatic payment chases and invoicing are coming soon. Read our guide to quote to cash for trade businesses, or try the free VAT and deposit calculator.