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Late Payment Interest in United Kingdom (2026)

11.75% per yearBank of England base rate (3.75% as of 30 June 2026) plus 8 percentage points, fixed for each six-month period. On a £5,000 invoice 60 days overdue, the money already owed to you looks like this:

Total owed on a £5,000 invoice · 60 days late

£5,166.58

Growing £1.61 every day it stays unpaid

principal
£5,000
interest
£96.58
fixed fee
£70

Rate verified 2026-07-06 · Source: GOV.UK — Late commercial payments · Methodology

Calculate your invoice

Rate prefilled from the UK default (11.75% per year) — override it if your contract sets its own.

£

60 days overdue

%

UK default: 11.75% per year

Total now owed to you · UK

£5,166.58

£5,000 principal · 60 days overdue at 11.75%

interest accrued
£96.58
growing daily by
£1.61
fixed compensation
£70

Simple interest: amount × (11.75% ÷ 365) × 60 days + fixed compensation fee. Information, not legal advice — contract terms can override statutory defaults.

The rule in plain English

If a UK business pays your invoice late, you have a statutory right to interest at 8 percentage points above the Bank of England base rate — no contract clause needed. The base rate on 31 December sets the statutory rate for January–June, and the rate on 30 June sets it for July–December.

You are also entitled to a fixed compensation fee per late invoice (£40, £70, or £100 depending on the debt size), intended to cover recovery costs. You can claim it in addition to the interest.

The right applies to business-to-business contracts for goods and services. If your contract specifies its own interest rate, that rate applies instead — but only if it is a "substantial remedy"; a token rate can be struck down and replaced by the statutory one.

Interest runs from the day after the due date. If no date was agreed, the default is 30 days after the invoice or delivery, whichever is later.

Debt sizeFixed compensation
debt up to £999.99£40
debt £1,000 to £9,999.99£70
debt £10,000 or more£100

Legal basis: Late Payment of Commercial Debts (Interest) Act 1998.

Worked example

invoice = £5,000, 60 days overdue, rate = 11.75%

daily interest = £5,000 × (11.75% ÷ 365) = £1.61

interest = £1.61 × 60 days = £96.58

fixed compensation = £70

total owed = £5,166.58

What to include in your demand letter

A short, factual letter recovers more invoices than a heated one. Checklist (general guidance, not legal advice):

  • Invoice number, date, original due date, and the exact principal outstanding.
  • The interest calculation shown line by line — principal, rate (11.75% per year), days overdue, daily amount — so there is nothing to dispute.
  • The fixed compensation you are claiming under Late Payment of Commercial Debts (Interest) Act 1998, with the band it falls into.
  • A single clear deadline (7 or 14 days is customary) and the payment details — remove every excuse for delay.
  • What happens next if unpaid: a letter before action, small claims / court filing, or referral to collections — stated plainly, without threats you don’t intend to keep.
  • A note that interest continues to accrue daily until payment — quote the per-day figure from the calculator above.

FAQ

What interest can I charge on a late invoice in United Kingdom?
Bank of England base rate (3.75% as of 30 June 2026) plus 8 percentage points, fixed for each six-month period. On a £5,000 invoice 60 days overdue, that is about £96.58 in interest plus a fixed £70 compensation fee. (Late Payment of Commercial Debts (Interest) Act 1998; verified 2026-07-06.)
Do I need a clause in my contract to charge this?
No — the statutory right applies automatically to business-to-business transactions. If your contract sets its own late-payment remedy, that applies instead, provided it is a substantial remedy rather than a token one.
How is late payment interest calculated?
Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue, plus the fixed compensation fee per invoice. Interest normally runs from the day after the due date, or 30 days after invoice/delivery if no due date was agreed. The calculator above shows the formula with your own numbers.
Does the UK rate change?
Resets each 1 January and 1 July based on the Bank of England base rate on 31 December / 30 June. Current figure reflects the 30 June 2026 base rate of 3.75%.
Can I really send an invoice for the interest?
Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date, the fixed compensation fee, and the legal basis (Late Payment of Commercial Debts (Interest) Act 1998). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

This page is general information about United Kingdom, verified 2026-07-06 against GOV.UK — Late commercial payments. It is not legal advice, and statutory rules have exceptions and transition rules that a short summary cannot capture. Contract terms often override statutory defaults. For significant or disputed sums, consult a qualified professional in your jurisdiction.

Other jurisdictions

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