Calculate statutory interest and fixed compensation on overdue commercial invoices under the Late Payment of Commercial Debts (Interest) Act 1998.
Bank of England base rate last updated August 2025. Interest calculated using simple interest as prescribed by the Act.
Historical base rates and the corresponding statutory interest rate (BoE + 8%) under the Late Payment of Commercial Debts Act 1998.
Source: Bank of England. Last updated August 2025. Rates are subject to change. Check the latest BoE announcements for confirmation.
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The Late Payment of Commercial Debts (Interest) Act 1998 gives businesses the right to charge interest on overdue invoices in business-to-business (B2B) transactions. This applies whether or not your contract mentions interest.
The statutory rate is the Bank of England base rate plus 8%. For example, if the BoE rate is 4%, the statutory interest rate is 12% per annum. Interest starts accruing from the day after the agreed payment date (or 30 days after delivery of goods/services if no date was agreed).
To calculate statutory interest on an overdue invoice, you need three things: the invoice amount, the date payment was due, and today's date (or the date you want to calculate up to).
The formula is: daily interest = invoice amount × statutory rate ÷ 365. Multiply the daily interest by the number of days overdue. For example, a £5,000 invoice at 12% (BoE 4% + 8%) overdue by 90 days: £5,000 × 0.12 ÷ 365 × 90 = £147.95.
If the Bank of England rate changed during the overdue period, you need to calculate each period separately at the applicable rate and add them together. The calculator above handles this automatically.
In addition to interest, the Act entitles you to claim a fixed sum as compensation for the cost of recovering a late payment. This applies to business-to-business (B2B) debts only. The compensation depends on the size of the debt:
You can claim compensation for each overdue invoice, not just once per debtor. This is a fixed amount — you do not need to prove your actual recovery costs.
The statutory interest rate is set at the BoE base rate on the day the debt becomes overdue, plus 8%. If the BoE rate changes while the invoice is still unpaid, the interest rate for new accrual periods adjusts to the new base rate plus 8%.
In practice, this means a long-overdue invoice may accrue interest at different rates over its lifetime. The calculator above automatically splits the calculation into periods whenever the BoE rate changed, so you get an accurate total.
Yes. Statutory interest accrues automatically — you do not need a court order to charge it. You can (and should) include interest and compensation in your chasing emails and your letter before action. If the debtor still does not pay, you can include the accrued interest in your court claim.
Interest continues to accrue even after you file a claim, right up until the date of payment or judgment. The court will typically award statutory interest as part of the judgment.
When chasing an overdue invoice, it is good practice to include the exact interest and compensation figures in your email. This shows the debtor that the amount owed is increasing and gives them a clear incentive to pay promptly.
The calculator above generates a ready-to-use email paragraph that you can copy and paste into your chasing correspondence. It includes the statutory basis, the interest amount, the fixed compensation, and the total additional amount owed.
If the debtor still does not pay after receiving your interest notice, consider sending a formal letter before action or starting a claim with Garfield.