Late payment interest calculator

How statutory interest works in the UK

The Late Payment of Commercial Debts (Interest) Act 1998 lets a business claim interest when another business pays an invoice late.

• The rate is 8% plus the Bank of England base rate, called the reference rate.
• The reference rate is fixed for six months. The base rate on 31 December applies from 1 January to 30 June. The base rate on 30 June applies from 1 July to 31 December.
• From 1 July 2026 to 31 December 2026, the reference rate is 3.75%, so statutory interest is 11.75% a year.
• Interest runs from the day after the payment was due until the day the customer pays.
• If your contract sets its own interest rate for late payment, that rate applies instead, as long as it is a substantial remedy. This means it must be enough to compensate you and to deter late payment.
• To claim, send the customer a new invoice for the interest and the fixed compensation.

How statutory interest works in Ireland

The European Communities (Late Payment in Commercial Transactions) Regulations 2012 give businesses in Ireland the same right.

• The rate is 8% plus the European Central Bank main refinancing rate, called the reference rate.
• The reference rate is fixed for six months. The ECB rate in force on 1 January applies from 1 January to 30 June. The ECB rate in force on 1 July applies from 1 July to 31 December.
• From 1 July 2026 to 31 December 2026, the reference rate is 2.40%, so statutory interest is 10.40% a year.
• Interest runs from the day after the payment was due until the day the customer pays.
• Your contract can set its own payment terms and interest rate. A court can set aside a term that is grossly unfair to the supplier.
• To claim, send the customer a new invoice for the interest and the fixed compensation.

Fixed compensation

You can also claim a fixed sum for each late invoice. The sum depends on the amount owed.

If your reasonable costs of recovering the debt are higher than the fixed sum, you can also claim the difference.

Worked example

A UK business sends a £5,000 invoice, including VAT, due on 1 September 2026. The customer pays on 16 October 2026, 45 days late.

• Statutory rate: 11.75% (3.75% reference rate plus 8%).
• Daily interest: £5,000 × 11.75% ÷ 365 = £1.61.
• Interest for 45 days: £5,000 × 11.75% ÷ 365 × 45 = £72.43.
• Fixed compensation: £70, because the invoice is between £1,000 and £9,999.99.
• Total claim: £142.43, on top of the £5,000 invoice.