The gross amount owed, including VAT.
No payment terms agreed? By law, payment is due 30 days after your customer received the invoice or the goods/services — whichever was later.
Not sure of the due date? Work it out from the invoice date
Use 30 if nothing was agreed — that's the legal default.
How the interest was calculated
Statutory interest is 8% + the Bank of England base rate set at the reference date (31 December or 30 June) before your invoice fell overdue, charged as simple interest per day. If the debt spans more than one six-month reference period, each period uses its own rate.
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Current statutory interest rate
The statutory late payment interest rate is currently 11.75% — the Bank of England base rate of 3.75% at the 31 December 2025 reference date, plus the 8% statutory uplift. It applies to commercial debts that became overdue between 1 January and 30 June 2026.
UK statutory late payment interest rates, 2020–2026
| Debt became overdue | BoE reference rate | Statutory interest rate |
|---|---|---|
| 1 Jan – 30 Jun 2026 | 3.75% | 11.75% |
| 1 Jul – 31 Dec 2025 | 4.25% | 12.25% |
| 1 Jan – 30 Jun 2025 | 4.75% | 12.75% |
| 1 Jul – 31 Dec 2024 | 5.25% | 13.25% |
| 1 Jan – 30 Jun 2024 | 5.25% | 13.25% |
| 1 Jul – 31 Dec 2023 | 5.00% | 13.00% |
| 1 Jan – 30 Jun 2023 | 3.50% | 11.50% |
| 1 Jul – 31 Dec 2022 | 1.25% | 9.25% |
| 1 Jan – 30 Jun 2022 | 0.25% | 8.25% |
| 1 Jul – 31 Dec 2021 | 0.10% | 8.10% |
| 1 Jan – 30 Jun 2021 | 0.10% | 8.10% |
| 1 Jul – 31 Dec 2020 | 0.10% | 8.10% |
| 1 Jan – 30 Jun 2020 | 0.75% | 8.75% |
The reference rate is the Bank of England base rate in force on 31 December (for debts that became overdue 1 January – 30 June) or 30 June (for debts that became overdue 1 July – 31 December). Rates last verified: 10 June 2026.
Worked example
Say a customer owes you £10,000 on an invoice that was due on 1 November 2025, and they finally pay on 15 March 2026 — 134 days late.
Statutory interest is simple daily interest: amount × annual rate × days ÷ 365, where the annual rate is the Bank of England base rate at the relevant reference date plus 8%.
- 2 November – 31 December 2025 (60 days): the reference rate is the base rate on 30 June 2025, which was 4.25%, so interest runs at 12.25% — £10,000 × 12.25% × 60 ÷ 365 = £201.37
- 1 January – 15 March 2026 (74 days): the reference rate resets to the base rate on 31 December 2025, which was 3.75%, so interest runs at 11.75% — £10,000 × 11.75% × 74 ÷ 365 = £238.22
Total statutory interest is £439.59, plus £100 fixed compensation (the tier for debts of £10,000 or more). The customer owes £10,539.59 — £539.59 more than the invoice value.
Frequently asked questions
Who can claim late payment interest?
Any business supplying goods or services to another business — including sole traders and freelancers acting in a business capacity. The Act covers business-to-business transactions only, not sales to consumers.
Do I have to have warned my customer first?
No. The right to statutory interest exists automatically — it doesn't need to be stated on your invoice or in your contract, although mentioning it on invoices is good practice.
How far back can I claim?
Up to six years in England, Wales and Northern Ireland (five in Scotland) — and you can claim on invoices that were paid late, not just ones still outstanding.
Is VAT charged on the interest?
No — statutory interest and compensation are outside the scope of VAT. The interest itself is normally calculated on the gross (VAT-inclusive) amount owed.
What if my contract already has an interest clause?
If your contract provides a "substantial remedy" for late payment — its own realistic interest rate — that contractual rate applies instead of the statutory one. A token rate can be challenged. Use the "my contract has its own late-payment interest rate" option in the calculator above to work out a contractual claim.
Can I claim my recovery costs too?
Yes. If your reasonable costs of recovering the debt (such as a debt collection agency or legal fees) exceed the fixed compensation, you can claim the difference.
Will claiming damage the customer relationship?
It can — which is why many businesses use the threat of statutory interest rather than the claim itself. For a measured escalation path, see My Customer Is 60 Days Late Paying – What Are My Options?
Further reading
Official guidance
- GOV.UK: Late commercial payments — charging interest and debt recovery — the official guidance on what you can charge and how to claim it.
- Late Payment of Commercial Debts (Interest) Act 1998 — the legislation itself, on legislation.gov.uk.
- Small Business Commissioner — free government service that helps small businesses resolve late payment disputes with larger customers.
- Bank of England: current Bank Rate — the base rate the statutory calculation is built on.
Managing late payment
- Late Payment Interest: Your Rights Under UK Law — the full guide to what you can claim and how to claim it.
- What Payment Terms Should a Small Business Set? — stop late payment before it starts.
- How to Reduce Your DSO: 9 Practical Strategies — get paid faster across your whole sales ledger.