Multiply the invoice amount by the annual rate (11.75% for invoices that go late before 1 January 2027), divide by 365 to get a daily figure, then multiply by the number of days since the due date. Add the fixed compensation of £40, £70 or £100 on its own line. On a £6,000 invoice paid 45 days late, that's £86.92 of interest plus £70.
In this article
The short version
- Daily interest = invoice amount x 11.75% / 365.
- Multiply by the days from the due date to the day you're paid.
- Add £40, £70 or £100 fixed compensation once per invoice.
- Use the base rate on the 30 June or 31 December before the invoice went late.
- Send the interest as a separate invoice that shows the working.
The calculation step by step
Statutory interest applies to business invoices under the Late Payment of Commercial Debts (Interest) Act 1998. It's simple interest, so the sum is short:
- Find the due date. If you agreed payment terms, it's the date in your terms. If you didn't, it's 30 days after your customer received the invoice, or 30 days after you delivered the work if that was later.
- Find the rate. It's 8% above the Bank of England base rate that was in force on the 30 June or 31 December before interest started to run. For any invoice that goes late between 1 July and 31 December 2026, that's 3.75% + 8% = 11.75%.
- Work out the daily interest: invoice amount × 11.75% ÷ 365.
- Count the days late, from the due date to the day you're paid (or to the date of your claim, if you're still waiting).
- Multiply the daily interest by the days late.
- Add the fixed compensation once: £40 if the invoice is under £1,000, £70 from £1,000 to £9,999.99, and £100 on £10,000 or more.
If chasing the debt has cost you more than the fixed sum, for example an agency's fees, you can add those reasonable costs above it as a separate line.
A worked example
You invoice a customer £6,000, due on 30 June 2026. They pay on 14 August 2026. Interest starts on 1 July, so the invoice falls in the second half of 2026 and the rate is 11.75%.
| Step | Figure |
|---|---|
| Invoice amount | £6,000.00 |
| Annual interest at 11.75% | £705.00 |
| Daily interest (£705 ÷ 365) | £1.9315 |
| Days late (30 June to 14 August) | 45 |
| Interest (£1.9315 × 45) | £86.92 |
| Fixed compensation (£1,000 to £9,999.99) | £70.00 |
| Total to claim | £156.92 |
Keep the daily figure to four decimal places until the end. Rounding it to £1.93 first gives £86.85, 7p short, and a customer checking your sum may query the difference.
On small invoices the compensation is most of the claim. A £600 invoice paid 20 days late carries £3.86 of interest, against £40 of compensation.
Four things to check before you send it
- Use the right base rate. The rate doesn't move when the base rate moves part way through a half-year. If the Bank of England changes the base rate in November 2026, invoices that went late in the second half of 2026 still carry 11.75%. Invoices that go late from 1 January 2027 use the base rate on 31 December 2026.
- Count from the due date, not the invoice date. On 30-day terms, an invoice dated 1 September is due on 1 October, and interest starts the day after. Where you agreed no terms, the 30 days run from when your customer received the invoice, or from when you finished the work if later.
- Don't compound it. Statutory interest is simple interest on the original amount. Adding last month's interest to the balance and charging interest on that overstates your claim.
- Charge the compensation once. It's £40, £70 or £100 per invoice, not per reminder. If you've agreed your own late payment interest rate in your contract, you charge that instead of statutory interest, not as well.
How to send the claim
GOV.UK suggests raising the interest on a separate invoice that quotes the original invoice number. Show each line of the working, including the rate and the 30 June or 31 December base rate it comes from. That keeps the original invoice easy for your customer's accounts team to match and pay, and a charge that shows its working is harder to dispute. The Small Business Commissioner has a free online calculator if you want to check your figures.
One invoice takes a couple of minutes. Doing it every week across a list of overdue invoices, each with its own due date and a total that changes daily, is hard to keep up by hand. Adfin runs this calculation for you on overdue business invoices, and the payment link your customer already has shows the latest total as the interest builds. You can set a grace period and waive it for any customer, and Adfin's AI Customer Agents carry on chasing the invoice within rules you approve.
Common questions
What is the formula for statutory interest? Invoice amount × annual rate ÷ 365 × days late. For invoices that go late in the second half of 2026, the annual rate is 11.75%.
Does interest run from the invoice date or the due date? From the due date. Where you agreed no terms, it's 30 days after your customer received the invoice or you delivered, whichever is later.
What rate do I use if the base rate has changed since the invoice went late? The rate fixed by the base rate on the 30 June or 31 December before interest started. A later change doesn't affect that invoice.
Is statutory interest compounded? No. It's simple interest, calculated daily on the original invoice amount.
Can I add the fixed compensation more than once? No. It's once per invoice: £40, £70 or £100 depending on the amount.
Should I add the interest to the original invoice? Government guidance is to send a new invoice for the interest, quoting the original. It keeps the original debt clear and shows your customer the working.
Sources
- legislation.gov.uk - Late Payment of Commercial Debts (Interest) Act 1998 (accurate as of October 2026) https://www.legislation.gov.uk/ukpga/1998/20/contents
- legislation.gov.uk - The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4 (accurate as of October 2026) https://www.legislation.gov.uk/uksi/2002/1675/article/4/made
- GOV.UK - Late commercial payments: interest on late commercial payments (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
- Bank of England - Interest rates and Bank Rate (accurate as of October 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- Small Business Commissioner - Interest calculator (accurate as of October 2026) https://www.smallbusinesscommissioner.gov.uk/help-and-guidance/interest-calculator/
