Late Payment Interest Calculator
Calculate the interest and fixed compensation you're legally entitled to under the Late Payment of Commercial Debts (Interest) Act 1998.
Your rights under the Late Payment Act
The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses the statutory right to charge interest on overdue invoices. This applies to business-to-business transactions — it does not cover consumer debts or transactions where one party is a private individual.
You can charge interest at 8% above the Bank of England base rate. With the current base rate at 3.75%, the total statutory interest rate is 11.75% per annum. Interest accrues daily from the day after the agreed payment date, and continues to accrue until the debt is paid in full.
In addition to interest, you're entitled to a fixed sum as compensation for the cost of recovering the debt. The amount depends on the size of the outstanding invoice: £40 for debts up to £999.99, £70 for debts between £1,000 and £9,999.99, and £100 for debts of £10,000 or more.
These rights exist specifically because late payment is a serious problem for UK businesses. But calculating and claiming interest doesn't actually get your invoice paid any faster. Knowing what you're owed is one thing — collecting it is another.
Owed chases your invoices automatically so you get paid on time. Connect Xero, and professional follow-ups go out in your name until the money arrives.
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