Late Payment Interest Calculator 2026/27

B2B Late Payment Interest Calculator

✓ Verified for 2026/27

Invoice Details

£
%
Late Payment Interest
£41
at 13.25% statutory rate
Compensation Fee
£70
for £1,000 to £9,999.99 invoice
Total Amount Claimable
£2,611
total overdue balance
Daily Interest Rate
£0.91
accrues every day

Debt Collection Summary

Original Invoice Principal £2,500
Accrued Interest £41
Statutory Compensation £70
Total Debt Value £2,611
Invoice 96%
Interest 1.5%
Comp 2.5%
ℹ️ UK businesses have a statutory right to charge interest on late B2B payments at 8% plus the Bank of England base rate. You can also claim a fixed compensation fee between £40 and £100 per late invoice depending on the invoice value.
🛡️
Verified for Accuracy (2026/27 Tax Year)
Fact-checked and audited by David Vance, CTA FCA, Chartered Tax Advisor & Accountant. Verified against official HMRC rules.

How We Calculated This

  1. Input variables: Enter the relevant amounts, rates, or percentages in the form.
  2. Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
  3. Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.

Real-World Examples

Standard Scenario

A basic calculation applying standard UK tax bands and allowances.

Calculation runs based on standard HMRC rules.
With Pension or Deductions

Factoring in a percentage of salary sacrifice or pension contributions.

Deductions are calculated and adjusted accordingly.

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Frequently Asked Questions & Detailed Tax Guide

What is statutory late payment interest in the UK?

In the UK, business-to-business (B2B) transactions are protected by the **Late Payment of Commercial Debts (Interest) Act 1998**. This legislation gives businesses a statutory right to charge interest and claim fixed compensation costs from other businesses that fail to pay invoices on time. Under the Act, unless a different payment term is agreed in writing, an invoice becomes late 30 days after the customer receives it or after the goods/services are delivered. The statutory interest rate is set at **8% above the Bank of England base rate**. This interest can be claimed retrospectively for up to 6 years.

What are the statutory late payment rates and fees?

When an invoice is paid late, you are legally entitled to claim two elements:

  • Statutory Late Payment Interest: Bank of England base rate + 8% (calculated daily from the day the invoice became late).
  • Fixed Debt Recovery Compensation: A statutory fee per invoice depending on the debt size:
    – Debt up to £999.99: **£40 fee**
    – Debt between £1,000 and £9,999.99: **£70 fee**
    – Debt of £10,000 or more: **£100 fee**
  • Reasonable Costs: You can also claim any reasonable costs you incur in hiring a debt recovery agency or solicitor to chase the debt if it exceeds the fixed compensation fee.

Step-by-Step Mathematical Calculation: Late Payment Interest

Let’s calculate the total interest and compensation due on a late invoice of £5,000 that is paid 90 days late, assuming a Bank of England base rate of 5.0%:

  • 1. Statutory Interest Rate: 5% (base rate) + 8% = 13% per annum.
  • 2. Daily Interest Rate: 13% / 365 days = 0.000356 (0.0356% per day).
  • 3. Calculate interest for 90 days: £5,000 * 13% * (90 / 365) = **£160.27**.
  • 4. Determine Fixed Compensation Fee: Since the debt is between £1,000 and £9,999.99, a statutory fee of **£70.00** applies.
  • 5. Total Late Payment Claim: £160.27 interest + £70.00 fee = **£230.27** additional due.
  • 6. The late payer must pay a total of **£5,230.27** to clear the invoice.

Tax Expert Pro-Tips: How to Implement Late Payment Terms

David Vance, CTA FCA, recommends: “Cash flow is the lifeblood of small businesses. To discourage late payments, make sure your invoice template explicitly states: ‘We reserve the right to charge interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998 on invoices paid late.’ You do not need to have a contract stating this; it is an automatic statutory right. However, applying interest can strain client relationships, so use our Late Payment Interest Calculator to send a formal statement as a final warning before taking legal action.”

Legislative References

  • Late Payment of Commercial Debts (Interest) Act 1998 – Primary statutory framework.
  • Late Payment of Commercial Debts Regulations 2013 – Compensation fee schedules and reasonable costs extensions.