Skilful DesignersHow statutory interest is calculated
Daily interest = invoice amount × (8% + base rate) ÷ 365
Multiply the daily interest by the number of days the invoice is overdue. On top, you can claim a fixed sum to cover the cost of chasing the debt:
| Size of the debt | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
If chasing costs you more, for example a debt collection agency, you can also claim reasonable recovery costs above the fixed sum. These rules come from the Late Payment of Commercial Debts (Interest) Act 1998 and apply between businesses, including sole traders.
Worked example
A £1,200 invoice paid 30 days late, with a base rate of 3.75%: the statutory rate is 11.75%. Daily interest is £1,200 × 11.75% ÷ 365 = £0.386, so 30 days come to £11.59. Add £70 fixed compensation, and you can claim £81.59.
The interest is small; the compensation is what gets attention. See how to chase a late invoice for the wording and steps that come before a claim.
Late payment interest on common invoice amounts
Frequently asked questions
Can I charge interest on a late invoice in the UK?
Yes, if your client is a business. The Late Payment of Commercial Debts (Interest) Act 1998 lets you claim interest at 8% above the Bank of England base rate, plus a fixed sum of £40, £70 or £100 depending on the size of the debt. It does not apply to private individuals unless your contract says so.
When does late payment interest start?
From the day after the payment date agreed in your contract or on the invoice. If no date was agreed, payment is due 30 days after the client received the invoice or the work, whichever is later, and interest runs from then.
Which Bank of England base rate do I use?
The reference rate is the base rate in force on 30 June or 31 December. For debts that become overdue between 1 January and 30 June, use the rate on the previous 31 December; between 1 July and 31 December, use the rate on 30 June. The rate then stays fixed for that debt.
Do I need to tell the client before claiming?
You do not need their permission, but you should state the interest and compensation clearly in writing, ideally in your terms from the start and in your reminder letters. Many clients pay promptly once they see the figure.
Sources
The figures and rules in this tool follow these official sources, checked on 3 November 2026:
Cite this tool
Skilful Designers. “Late Payment Interest Calculator.” https://skillfuldesigners.co.uk/late-payment-interest-calculator/ (updated 3 November 2026). Built by Sumair Roudani.