Rates checked for 2026
Checked on 23 October 2026: Bank Rate has been 3.75% since 18 December 2025, and the Bank of England kept it at 3.75% in June, July and September 2026. So both 2026 reference dates use 3.75%, and statutory interest is 11.75% a year for debts that became late in 2026. The rate for January to June 2027 will be 8% plus Bank Rate on 31 December 2026; the next rate decision is on 5 November 2026. The calculator's rate table is updated every January and July.
Your right to interest on late payments
When a business pays you late, you do not have to absorb the cost. Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses and public sector bodies in the UK can claim interest on overdue invoices from other businesses, plus a fixed sum to cover the cost of chasing the debt. The right exists automatically for business-to-business contracts for goods and services, even if your terms never mention it.
It does not apply to consumers, so you cannot add statutory interest to an invoice for a private customer. If your contract sets its own fair rate for late payment, that rate applies instead.
How the statutory rate is set
Statutory interest is 8% a year plus the Bank of England base rate. The base rate used is not today's rate but the rate on a fixed reference date: the rate in force on 31 December applies to debts that become late from January to June, and the rate on 30 June applies from July to December. With the base rate at 3.75% on both reference dates in 2026, the statutory rate for 2026 is 11.75% a year.
The calculator holds a table of reference rates and splits a long-running debt into six-month periods, applying the right rate to each. It updates whenever the base rate changes on a reference date.
Working out the interest
Statutory interest is simple interest, charged daily, from the day after payment was due until the day it is paid. The formula is: unpaid amount × annual rate ÷ 365 × days late. On a £2,400 invoice paid 45 days late at 11.75%, that is £2,400 × 11.75% ÷ 365 × 45 = £34.77.
If the invoice did not state a due date, payment is generally treated as due 30 days after the later of receiving the invoice or the goods or services. Payment terms longer than 60 days are restricted for large businesses unless expressly agreed and fair, so check your contract before relying on long terms.
Fixed compensation on top
As well as interest, you can claim a fixed sum per invoice to cover the cost of recovering the debt: £40 for debts under £1,000, £70 for debts of £1,000 to £9,999.99 and £100 for debts of £10,000 or more. If your reasonable recovery costs were higher, for example a collection agency fee, you may be able to claim the extra.
No VAT is charged on statutory interest or compensation, because they are not payment for a supply of goods or services.
Step by step: claiming statutory interest
- Check that the debt is business to business and that your contract does not set a different remedy.
- Confirm the due date from your invoice or contract.
- Enter the amount and dates above to get the interest, daily rate and fixed compensation.
- Send the customer a short written claim with the statement PDF, and keep a copy.
- Keep the daily rate handy: if payment slips further, interest keeps building at that amount per day until the debt is paid.
Claiming it without damaging the relationship
Most businesses use their right to interest as leverage rather than a weapon. Mention it in your terms from the start, send friendly reminders before and after the due date with the invoice due date reminder, and raise interest only once an invoice is clearly overdue. When you do, be factual: copy the claim wording from the calculator, attach the statement PDF and give a clear deadline.
If a customer still does not pay, you can consider a formal letter before action and, for debts up to £10,000 in England and Wales, the small claims track of the county court. Read our guide to payment terms to prevent late payment next time. This page is general information, not legal advice.