Statutory interest calculator for late payments (UK)
Calculate statutory interest on overdue B2B invoices in the UK using the 8% + base rate formula and fixed compensation fees.
Statutory interest calculator for late payments (UK)
If another business pays late, you can charge statutory interest under the Late Payment of Commercial Debts Act. This is designed to protect cash flow for small suppliers.
The statutory interest formula
Interest = Debt x (8% + Bank of England base rate) x (Days overdue / 365)
Example:
- Invoice value: GBP 2,000
- Base rate: 5.25%
- Days overdue: 45
Interest = 2,000 x (0.08 + 0.0525) x (45 / 365)
= 2,000 x 0.1325 x 0.1233
= GBP 32.66
Fixed compensation fees (B2B)
You can also add a fixed fee per invoice:
| Invoice value | Fixed fee |
|---|---|
| Up to GBP 999.99 | GBP 40 |
| GBP 1,000 to GBP 9,999.99 | GBP 70 |
| GBP 10,000 and over | GBP 100 |
These fees are separate from interest.
When not to use statutory interest
- The customer is a consumer (not a business).
- Your contract specifies a different interest rate.
- You want to preserve a long-term relationship and choose to waive it.
How to apply it in practice
- Confirm the invoice is overdue.
- Calculate interest using the formula above.
- Add the fixed fee if it is B2B.
- Send a clear notice or updated statement.
Toolfy tip
Use a reminder workflow so late invoices are flagged at Day 7, Day 14, and Day 21. If you decide to add statutory interest, attach the calculation to the invoice record so the customer can see the numbers.
⚠️ Important Disclaimer
This guide is for general informational and educational purposes only. It does not constitute professional advice of any kind (legal, financial, tax, insurance, or otherwise).
Before making business decisions: Consult with qualified professionals (solicitors, accountants, insurance brokers, etc.) who can assess your specific circumstances. Laws, regulations, and industry standards change frequently and vary by location and situation.
Toolfy and the article authors accept no liability for decisions made or actions taken based on information provided in this guide. You are solely responsible for ensuring compliance with all applicable laws and regulations.
Frequently Asked Questions
When can I charge statutory interest?
Does statutory interest apply to consumers?
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