UK late payment interest calculator

How the calculation works

1. Interest starts the day after the payment was due. Without an agreed payment date, the customer must pay within 30 days of getting your invoice or the goods or service. [5]
2. The yearly rate is 8% plus the Bank of England rate in force on 30 June, for interest that starts between 1 July and 31 December, or on 31 December, for interest that starts between 1 January and 30 June. [3] That rate then stays the same for the debt.
3. The interest is simple: the yearly amount divided by 365 gives the interest per day, times the number of days late. [1]
4. On top of the interest, you can charge a fixed sum for recovery costs once for each payment: £40, £70 or £100 depending on the debt. [2]
5. To claim it, send the customer a new invoice for the interest and the fixed sum. [1]

Statutory interest rate by period

The rate that applies depends on when the debt became late. [3] [4]

The Bank Rate has been 4% since 5 November 2026. Debts that become late from 1 January 2027 will use the rate in force on 31 December 2026.

Fixed sums for recovery costs

You can charge it once for each payment. A supplier can also claim reasonable costs each time it tries to recover the debt. [2]

When statutory interest does not apply

• It is for business-to-business transactions, not for sales to consumers. [1]
• You cannot claim it if your contract sets a different rate of interest. In a contract with a public authority, you cannot use a lower rate. [1]

What may change: the Commercial Payments Bill

The Commercial Payments Bill was introduced in the House of Lords on 19 May 2026, passed its third reading there on 20 October 2026 and had its first reading in the House of Commons on 21 October 2026. [6] It is not law yet. The government has said it plans a 60-day cap on payment terms and mandatory interest on late payments. [7] Until the new rules are in force, the calculator above uses the current ones.

Then, in Clodou

• Clodou lists your overdue invoices and prepares payment reminders that you approve before anything is sent.
• Once you have the figures, one sentence in the chat makes the interest invoice, in pounds, with your numbering and a PDF.
• Clodou does not calculate statutory interest itself, and it does not give legal advice.

Invoice Northwind Ltd £34.77 late payment interest and £70 recovery costs for INV-0042

More on getting paid in the UK: UK invoice template for sole traders, how to invoice as a sole trader and payment reminder email templates.

Questions

What is the UK late payment interest rate now?

11.75% a year for debts that became late from 1 July to 31 December 2026: 8% plus the Bank of England rate of 3.75% in force on 30 June 2026. The rate is fixed when interest starts and stays the same until the debt is paid.

When does statutory interest start?

The day after the payment was due. If you never agreed a payment date, GOV.UK says the customer must pay within 30 days of getting your invoice or the goods or service.

How much is the fixed sum for recovery costs?

£40 for a debt up to £999.99, £70 from £1,000 to £9,999.99 and £100 for £10,000 or more. You can charge it once for each payment, on top of the interest.

Can I claim statutory interest if my contract sets another rate?

No. GOV.UK says you cannot claim statutory interest if there is a different rate of interest in a contract. In a contract with a public authority, you cannot use a lower rate.

How do I charge the interest?

Send the customer a new invoice for the interest and the fixed sum, as GOV.UK advises. In Clodou, one sentence in the chat makes that invoice; Clodou does not work out the interest for you, so use this calculator first.

Is the law about to change?

A government bill, the Commercial Payments Bill, passed the House of Lords on 20 October 2026 and is now in the House of Commons. It is not law yet. The government has said it plans a 60-day cap on payment terms and mandatory interest on late payments. This page uses the rules in force today.

Sources

1. GOV.UK: Late commercial payments, interest on late commercial payments
2. GOV.UK: Late commercial payments, claim debt recovery costs
3. legislation.gov.uk: Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002
4. Bank of England: Official Bank Rate history
5. GOV.UK: Invoicing and taking payment, payment obligations
6. UK Parliament: Commercial Payments Bill [HL], stages
7. GOV.UK news: Time to Pay Up, the government's late payment plans

Last checked on 7 November 2026. This page explains the rules; it is not tax or legal advice. Check your invoices with your accountant or tax adviser.