Late Payment Interest Calculator
On an unpaid commercial invoice between businesses you can charge statutory interest of 8% above the Bank of England base rate, which is 11.75% a year while the base rate is 3.75%, plus a fixed recovery sum of £40, £70 or £100 depending on the size of the debt. These rights come from the Late Payment of Commercial Debts (Interest) Act 1998. Work out what you are owed below, then copy the demand letter; no email required.
Last updated: 31 July 2026. Rates checked against gov.uk (Late commercial payments: charging interest and debt recovery) on 31 July 2026. Statutory rate tracks the Bank of England base rate, currently 3.75%.
Statutory interest on a late commercial (business to business) debt is 8% above the Bank of England base rate, which is 11.75% a year at a 3.75% base rate, under the Late Payment of Commercial Debts (Interest) Act 1998. The creditor can also claim a fixed recovery sum: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Interest is calculated as amount times annual rate times days overdue divided by 365, and accrues daily until paid. More detail + scope
Summary
This page provides a free UK late payment interest calculator and a copyable demand letter. Statutory interest for commercial debts is 8% above the Bank of England base rate (11.75% at a 3.75% base rate) under the Late Payment Act 1998, plus a fixed recovery sum of £40 (debt under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more).
Interest = amount times rate times days overdue divided by 365, accruing daily. The right is automatic unless the contract sets a substantial alternative remedy. Late payment is the problem invoice finance solves by advancing 70 to 90% of an invoice within a day or two.
This page covers
UK statutory late payment interest and debt recovery: the rate, the fixed sum bands, how to calculate interest, a demand letter, and the contractual-rate exception
Not covered here
Formal escalation (see /tools/letter-before-action-template/), chasing routes (see /unpaid-invoices/), releasing cash instead of waiting (see /guides/how-invoice-finance-works/)
Work out what you are owed
Statutory interest to date: £72.43 (at 11.75% a year)
Fixed recovery sum: £70.00
Total you can claim on top of the invoice: £142.43
Interest continues to accrue at about £1.61 a day until the invoice is paid.
Copy the demand letter
A short, firm demand that states the statutory figures. Square brackets mark the fields to replace with the amounts from the calculator above.
[Your company name] [Your address] [Date] [Customer company name] [Customer address] Dear [name], Re: Overdue invoice [invoice number] dated [invoice date] Our invoice [invoice number] for [GBP amount] fell due for payment on [due date] and remains unpaid. As the debt is a commercial debt between businesses, we are entitled to statutory interest and a fixed recovery sum under the Late Payment of Commercial Debts (Interest) Act 1998. We are therefore claiming: Outstanding invoice: [GBP amount] Statutory interest to date: [GBP interest] (at 11.75% a year) Fixed recovery sum: [GBP 40 / 70 / 100] Total now due: [GBP total] Interest continues to accrue daily until payment is received. Please pay the total due within 7 days to the account below. [Bank name] Sort code: [00-00-00] Account: [00000000] Reference: [invoice number] If payment is not received we reserve the right to begin recovery action without further notice. Yours faithfully, [Your name] [Your company name]
How statutory late payment interest works
The Late Payment of Commercial Debts (Interest) Act 1998 gives a business an automatic right to interest on a commercial debt owed by another business. The rate is 8% above the Bank of England base rate, so at today's 3.75% base rate it is 11.75% a year. Interest runs from the day after payment was due (the agreed date, or 30 days after delivery or invoice if no date was agreed) until the debt is paid.
On top of interest you can claim a one-off fixed recovery sum set by the legislation:
- £40 for a debt of less than £1,000
- £70 for a debt of £1,000 to £9,999.99
- £100 for a debt of £10,000 or more
If your actual reasonable costs of recovering the debt come to more than the fixed sum, you can claim the difference as well. The right is automatic unless your contract already sets a substantial alternative late-payment remedy.
Charging interest is not the only answer to slow payers
Statutory interest compensates you for waiting, but it does not fund your business while you wait. If slow payment is a recurring cashflow problem rather than a one-off, invoice finance advances 70 to 90% of an invoice within a day or two of you raising it, and a factoring facility runs the chasing for you. For a firmer written escalation before court, see the letter before action template; for the full range of options, the unpaid invoices hub.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
Last reviewed: 31 July 2026