Invoice Late Payment Interest Calculator

The Late Payment of Commercial Debts Act 1998 gives businesses the right to charge statutory interest at 8% above the Bank of England base rate on overdue B2B invoices and claim fixed compensation.

The statutory interest rate is 8% per annum plus the Bank of England base rate. If the BoE rate is 5.25%, the statutory rate is 13.25%. This rate is set by HMRC and changes when the base rate changes.

In addition to interest, you can claim: £40 for invoices up to £999.99, £70 for £1,000-£9,999.99, and £100 for £10,000 or more. These are automatic statutory rights.

It applies to commercial contracts where both parties are acting in the course of business. It does not apply to consumer contracts or certain financial services and mortgage contracts.

Yes. You can agree payment terms between 0-60 days. For public sector contracts, the limit is 30 days. Terms longer than 60 days must not be grossly unfair to the supplier.

Include interest in your next invoice or send a separate interest invoice. Note the statutory rate and days overdue. Some businesses add interest to the initial invoice for psychological effect.

Terms that limit or exclude the Act's rights must not be 'grossly unfair'. Pure exclusion clauses are void. Some large companies attempt to impose very long payment terms (90-120 days).

Disputed invoices do not accrue statutory interest for the disputed amount during the period of dispute. Once the dispute is resolved in your favour, interest accrues from the original due date.

Yes. Statutory late payment interest is taxable income for the creditor and a tax-deductible expense for the debtor.

The Voluntary Prompt Payment Code commits signatories (mainly large companies) to pay invoices within 60 days (ideally 30 days). The Government publishes late payment performance data for large businesses.

Yes. Sole traders and self-employed individuals in business can use the Late Payment Act for B2B invoices. It does not apply to invoices to private individuals as customers.

Not necessarily. It may damage customer relationships. Most businesses use it as a last resort or as leverage to encourage payment. Mentioning statutory interest rights in your terms can prompt faster payment.