Charging statutory interest on an unpaid business invoice

If another business pays your invoice late, UK law gives you a right to charge statutory interest: 8% a year on top of the Bank of England base rate, counted for each day the money is late. You can also claim a fixed sum for the cost of chasing it. This guide explains how the interest is worked out, so you can check a figure before you put it on an invoice.

When it applies

• Both sides are acting in the course of business, and the invoice is for goods or services. Debts owed by consumers are not covered.
• The invoice is paid after the date it was due. If your contract does not give a payment date, the Act counts 30 days from when you delivered the work or the customer was told the amount, whichever is later.
• Your contract does not already set its own interest for late payment. A contract term that tries to exclude statutory interest is void unless it gives a substantial remedy for late payment, so a token term does not take the right away. See section 8 and section 9 of the Act.

The rate

Statutory interest is the base rate plus 8%. GOV.UK describes it the same way. Which base rate? The one in force on a reference date, then fixed for the life of that debt: interest that starts between 1 July and 31 December uses the Bank of England base rate on 30 June; interest that starts between 1 January and 30 June uses the rate on 31 December (Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4).

For reference, the Bank Rate in force today is 3.75% (the table was last checked against the Bank of England on 24 Sep 2026). That would make the statutory rate 11.75% a year for debts whose reference date is today. A debt from earlier in the year may use a different base rate. Contains public sector information licensed under the Open Government Licence v3.0; source: Bank of England.

When interest starts

Interest starts to run on the day after the payment date (section 4). For a customer that is not a public authority, a contract payment term longer than 60 days can be cut back to 60 days unless the longer term is not grossly unfair to you.

The sum

The interest on an unpaid invoice is:

amount × (base rate + 8%) ÷ 365 × days late

A worked example

An invoice for £2,500.00 was due on 30 June 2026 and paid on 28 September 2026.

• Days late: 90 (1 July to 28 September 2026).
• Reference rate: 3.75% (the base rate on 30 June 2026), so the statutory rate is 11.75%.
• Interest: £72.43, from £2,500.00 × 11.75% ÷ 365 × 90.
• Fixed compensation: £70.00, because the invoice is between £1,000 and £9,999.99.
• Total claim on top of the invoice: £142.43.

We round once at the end, so a total can differ by a penny or so from an example that rounds the daily figure first, such as the one on GOV.UK. Use the calculator for your own dates.

Claiming it

GOV.UK says to send a new invoice if you decide to add interest to the money you are owed. Our letter and invoice wording template shows one way to ask. Interest and the fixed sum are generally treated as outside the scope of VAT, so the calculator shows VAT as £0.00; check with HMRC or your accountant if you are unsure for your business.