Free tool · UK · B2B invoices
Late Payment Interest Calculator
Work out exactly what a late-paying business customer owes you — statutory interest plus fixed compensation — under the Late Payment of Commercial Debts (Interest) Act 1998.
Your legal right to charge interest
When another business pays you late, UK law gives you the right to charge statutory interest of 8% above the Bank of England base rate, plus a fixed sum to cover recovery costs. This applies to business-to-business transactions automatically, even if your contract does not mention interest.
The statutory rate is fixed in six-month blocks: for debts that become late between January and June, use the base rate as at the previous 31 December; for debts late between July and December, use the base rate as at 30 June. That reference rate, plus 8%, applies for the whole six-month period.
How it is calculated
Interest is charged on the gross invoice amount including VAT, but the interest and compensation themselves are not subject to VAT. Compensation is claimable per overdue invoice.
Common questions
How much interest can I charge?
Statutory interest of 8% plus the Bank of England base rate for B2B debts, under the Late Payment Act 1998. The rate is fixed for six-month periods using the base rate on 31 December or 30 June.
How is it worked out?
Annual rate ÷ 365 gives the daily rate; multiply by the unpaid amount and the days late. Interest runs from the day after the due date until the debt is paid.
What compensation can I add?
A fixed sum per invoice on top of interest: £40 under £1,000, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more.
Do I need it in my contract?
No. For B2B transactions the right applies automatically, even if the contract is silent. Statutory interest and compensation are not subject to VAT.
Get paid faster, without the awkward chasing
AdminShield watches your invoices, flags the ones going overdue, works out the interest and compensation you're owed, and sends professional payment reminders automatically — so late payers don't cost you time or cash flow.
Start freeThis calculator gives an estimate based on the Late Payment of Commercial Debts (Interest) Act 1998 and published Bank of England reference rates. It covers B2B debts; consumer (B2C) rules differ. It is not legal advice — for disputed or complex debts, seek professional guidance.