UK Late Payment Interest Calculator (2026)

Calculate the statutory interest and fixed compensation you can claim on a late-paid UK B2B invoice under the Late Payment of Commercial Debts (Interest) Act 1998. Current statutory rate: 11.75% APR (Bank of England base rate 3.75% plus 8%).

Last updated: 8 May 2026.

### Worked example: £5,000 invoice paid 60 days late at the statutory rate

| Item | Value |
| --- | --- |
| Invoice amount | £5,000 |
| Statutory rate | 11.75% (BoE base 3.75% + 8%) |
| Days overdue | 60 |
| Daily interest | £1.61 |
| Total interest accrued | £96.58 |
| Fixed compensation (debt £1,000 to £9,999.99) | £70.00 |
| Total interest + compensation due | £166.58 |
| Total now due including principal | £5,166.58 |

Source: Late Payment of Commercial Debts (Interest) Act 1998; Bank of England base rate 3.75%

Fixed compensation tiers: £40 under £1,000, £70 from £1,000 to £9,999.99, £100 at £10,000 and above, per overdue invoice.

How the calculation works

Daily interest = Invoice principal x annual rate divided by 365. Multiply by days overdue (paid date minus due date). Add the fixed compensation charge by debt size: £40 under £1,000, £70 between £1,000 and £10,000, £100 at £10,000 and above.

Worked example: £5,000 invoice, 60 days overdue, statutory 11.75% rate. Daily interest = (5000 x 0.1175) / 365 = £1.61. Sixty days = £96.58. Plus £70 fixed compensation = £166.58 total interest and compensation owed on top of the £5,000 principal. Total now due: £5,166.58.

When statutory interest applies

The right applies automatically to any UK B2B contract where no other interest rate is contractually agreed. It does not apply to consumer transactions or contracts where you've agreed an alternative substantial remedy. You can claim statutory interest even if the customer eventually pays the principal.

Late payment demand letter template

Once you have the numbers above, put them in a demand letter. A late payment demand is a firm written request for payment that adds the statutory interest and fixed compensation to the original invoice and sets a deadline. Copy the template below, drop in the figures from the calculator, and send it by email and by post. Square brackets mark the fields to replace; delete the interest line if the invoice is not yet a full day overdue.

LATE PAYMENT DEMAND

[Your company name]
[Your address]
[Email]  [Phone]

[Date]

To: [Customer / company name]
[Customer address]

Dear [name],

FORMAL DEMAND FOR PAYMENT: overdue invoice [invoice number]

Our invoice [number] dated [invoice date], for GBP [0.00], was
due for payment on [due date]. It is now [X] days overdue and
remains unpaid despite our earlier reminders.

Under the Late Payment of Commercial Debts (Interest) Act 1998
we are entitled to add statutory interest and a fixed
compensation sum to this debt. The amount now due is:

  Original invoice [number]                 GBP [0.00]
  Statutory interest ([rate]% per year,
    [X] days overdue)                       GBP [0.00]
  Fixed compensation (statutory)            GBP [40 / 70 / 100]
  TOTAL NOW DUE                             GBP [0.00]

Statutory interest runs at 8% above the Bank of England base
rate and continues to accrue daily until payment is received.
The fixed compensation is GBP 40 for debts under GBP 1,000,
GBP 70 for debts of GBP 1,000 to GBP 9,999.99, and GBP 100 for
debts of GBP 10,000 or more, charged once per overdue invoice.

Please pay the full amount within [7] days of this letter to:
[Bank name]  Sort code: [00-00-00]  Account: [00000000]
Reference: [invoice number]

If payment is not received by [deadline date] we reserve the
right to begin recovery action, including a formal letter
before action and a claim through the courts, without further
notice. That may add court fees and further interest to the
sum you owe.

Yours [faithfully / sincerely],
[Name]
[Position], [Your company name]

A demand letter is the natural escalation from a reminder: it makes the cost of ignoring you explicit. If it goes unanswered, the next formal step is a letter before action, which states your intention to issue a court claim.

If the customer still won't pay

After 30 days overdue, send a letter before action. After 14 days more without payment, you can issue a money claim online, file a statutory demand if the debt is over £750, or sell the invoice for immediate cash.