Late payment interest calculator

By Pasecom Group Ltd editorial team · Reviewed 9 November 2026

This page is general information for England and Wales, not legal advice. Debt Collection UK introduces unpaid invoices owed by UK limited companies, LLPs and PLCs to partner agencies, who collect. Figures here come only from primary sources checked on 9 November 2026: the Late Payment of Commercial Debts (Interest) Act 1998, the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, GOV.UK late commercial payments guidance and the Bank of England Bank Rate history.

How the calculation works

1. Find when interest starts. Under section 4 of the Act, statutory interest starts to run on the day after the relevant day — usually the agreed payment date. With no agreed date, a default 30-day period applies.
2. Find the reference rate. Article 4 of the 2002 Order sets the rate at 8% a year over the Bank of England official dealing rate (Bank Rate) in force on 30 June, for interest that starts to run between 1 July and 31 December, or on 31 December, for interest that starts to run between 1 January and 30 June. That rate is fixed for the debt — later Bank Rate changes do not move it.
3. Add 8%. Reference rate + 8% = annual statutory rate.
4. Work out daily interest. Unpaid amount × annual rate ÷ 365.
5. Multiply by days late. Count from the day after the due date up to the day of payment (or today).
6. Add fixed compensation. Under section 5A: £40, £70 or £100 per invoice, depending on the size of the debt.

More background sits on our statutory interest and late payment compensation pages.

Reference rates used

The calculator pre-fills these reference rates from the Bank of England Bank Rate history. You can overwrite them. For start dates outside this table it leaves the rate blank, so you enter the figure yourself rather than relying on a guess.

For interest starting from 1 January 2027 the reference date is 31 December 2026, which has not yet arrived. Check the Bank of England on that date and enter the figure.

Fixed compensation bands

The fixed sum is per invoice, charged once. Where reasonable recovery costs are higher, the Act allows the difference to be claimed too — keep a record of what you actually spent.

Worked method (arithmetic only)

An invoice of £5,000 fell due on 15 January 2026 and is still unpaid 60 days later. Interest started in the first half of 2026, so the reference rate is Bank Rate on 31 December 2025: 3.75%. The statutory rate is 11.75%. Daily interest is £5,000 × 11.75% ÷ 365 ≈ £1.61. After 60 days: about £96.58. The debt is between £1,000 and £9,999.99, so fixed compensation is £70. The figures show the method only; your dates and amount will differ.

When statutory interest applies

• Both parties are acting in the course of a business (B2B), not a consumer sale.
• The contract does not set its own substantial interest remedy. GOV.UK says you cannot claim statutory interest if a different rate is in the contract.
• The debt is genuinely due — not disputed on quality, delivery or quantity.

If the debt is disputed, adding interest will not resolve it. Deal with the dispute first, or take advice.

Have it recovered with the invoice

A calculation is only useful if the company pays. When reminders, a call to a decision-maker and a letter before action have failed on an undisputed invoice, a partner agency can demand the principal, statutory interest and compensation together. Start from unpaid invoices, read the wider business debt collection path, or see debt collection for small business if you are a sole trader or small firm owed money by a Ltd.

The fee is 15% of what is recovered, payable only when you have been paid. Recovery is not guaranteed. See no collection, no fee for how that works.

Have it recovered with the invoice — the debtor must be a UK Ltd, LLP or PLC, and invoice upload is mandatory. Most claims partners place are £1,500 or more; the form may still accept smaller amounts.

What we do (introducer only)

Debt Collection UK is a trading name of PASECOM GROUP LTD (company 17139327). We introduce unpaid B2B invoices against UK limited companies, LLPs and PLCs to independent partner agencies, who collect. We are not solicitors, not an FCA-authorised debt collector, and we do not issue court or insolvency proceedings ourselves.

Frequently asked questions

What rate of statutory interest applies to a late business invoice?

Where the Late Payment of Commercial Debts (Interest) Act 1998 applies and the contract does not set its own substantial remedy, statutory interest is 8% a year above the Bank of England reference rate. The reference rate is the official Bank Rate in force on 30 June (for interest that starts to run between 1 July and 31 December) or 31 December (for interest that starts to run between 1 January and 30 June). It is fixed for that debt.

What reference rate does the calculator use?

For interest starting to run in 2026 the reference rate is 3.75% in both halves of the year: Bank Rate was 3.75% on 31 December 2025 and still 3.75% on 30 June 2026, per the Bank of England Bank Rate history. That gives 11.75% a year. For 2024 and 2025 start dates the calculator pre-fills the reference rate from the same history. For other dates it leaves the box empty so you can enter the rate yourself.

Is statutory interest simple or compound?

Simple. Daily interest is the unpaid amount multiplied by the annual rate, divided by 365. Interest runs from the day after the payment was due until the day it is paid.

How much late payment compensation can I add?

Once statutory interest starts to run you can add a fixed sum per invoice: £40 for a debt under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. Reasonable recovery costs above that fixed sum may also be claimable where justified.

When does interest start if the contract has no payment date?

Where there is no agreed payment day, the Act uses a default 30-day period, generally counted from the later of delivery or receipt of the invoice. Check section 4 of the Act on legislation.gov.uk for the detail that applies to your facts.

Can I claim statutory interest if my contract sets its own interest rate?

GOV.UK says you cannot claim statutory interest if a different rate of interest is set in the contract. A contractual remedy must be substantial; a very low or nil rate may be challenged. This is general information, not legal advice.

How much does it cost to have the invoice recovered?

The fee is 15% of what is recovered, payable only when you have been paid. Recovery is not guaranteed. On a worked example only: if £10,000 is recovered, the fee would be £1,500 and £8,500 would be due to you. That is fee arithmetic, not a recovery statistic.

Does adding interest make the company pay?

No. Interest and compensation strengthen the claim schedule and the demand, but they do not force payment. If reminders and a letter before action have failed on an undisputed invoice, a partner agency can demand principal, interest and compensation together.

Are you solicitors or FCA-authorised collectors?

No. Debt Collection UK is a trading name of PASECOM GROUP LTD (company 17139327) and an introducer only. Partners collect. We are not solicitors and not an FCA-authorised debt collector. The debtor must be a UK Ltd, LLP or PLC. The fee is 15% of what is recovered, payable only when you have been paid. Recovery is not guaranteed.