✓DisputeKit

For UK businesses and freelancers · rates checked 4 November 2026

Late payment interest calculator (UK)

When another business pays your invoice late, the law lets you add interest at 8% over the Bank of England rate, plus £40 to £100 per invoice. Work out exactly what you can claim, then send the letter before action. Free.

Step 1 · Your invoices

Enter the due date. If you never agreed payment terms, enter the invoice date instead and leave the due date blank: the law then gives the customer 30 days.

Step 2 · For the letter

What you can claim

Enter an invoice to start.

Letter before action

Send it by email and recorded post. Many customers pay once they see the interest running.

How UK late payment interest works

The Late Payment of Commercial Debts (Interest) Act 1998 covers sales of goods and services between businesses, including sole traders and freelancers. It doesn't cover sales to consumers.

  • Interest: simple interest at 8% a year above the Bank of England "reference rate". The reference rate is Bank Rate on 31 December for invoices due from January to June, and on 30 June for invoices due from July to December. It stays fixed for that invoice. Bank Rate has been 3.75% since 18 December 2025, so invoices due in 2026 carry 11.75%.
  • When it starts: the day after the agreed due date. With no agreed date, 30 days after the customer got the invoice or the goods, whichever is later.
  • Fixed compensation per invoice: £40 for invoices under £1,000, £70 from £1,000 to £9,999.99, £100 from £10,000. You can also claim reasonable recovery costs above that, such as a debt collector's fee.
  • Your contract can change it: if your terms set their own late-payment interest that is a "substantial remedy", that rate applies instead.

Changes coming

The Commercial Payments Bill was going through Parliament in autumn 2026 (report stage in the House of Lords in September). It would cap payment terms for large businesses paying smaller ones at 60 days and stop contracts from removing the right to statutory interest. It is not law yet, so this calculator uses today's rules. We'll update it when it passes.

What if they still don't pay?

Claims up to £10,000 go to the small claims track. You can start online with Money Claim Online on GOV.UK, which also asks for the statutory interest. In Scotland use the simple procedure. Keep the letter and proof you sent it: courts expect a letter before action first.

Will claiming interest ruin the relationship?

Many businesses send the letter but offer to drop the interest if the invoice is paid within a few days. The law gives you the right; how you use it is up to you.

Is this legal advice?

No. It's legal information and a letter template based on the published rules. For a large or disputed debt, speak to a solicitor or the Small Business Commissioner.

Checked 4 November 2026 against the Late Payment of Commercial Debts (Interest) Act 1998 and the 2013 Regulations, the Bank of England Bank Rate database (3.75% since 18 Dec 2025) and reports on the Commercial Payments Bill (Shoosmiths via Mondaq, 30 Sep 2026). Related: chargeback time limits · get a card refund.