Statutory interest is the interest UK law lets you charge a business client that pays late: the Bank of England base rate plus 8 percentage points a year, plus a fixed £40, £70 or £100 compensation sum per invoice. Right now that works out at 11.75% a year (base rate 3.75%, verified 19 Oct 2026). This guide walks you through three real-number examples, shows you how to get the exact figure in seconds with our late payment interest calculator, and gives you the words to put that number in a chasing email without burning the relationship.
This is general information, not legal or financial advice. If the amount is large or the situation is disputed, get proper professional advice.
The maths in one paragraph
Everything follows a single formula, the same one our calculator uses:
Interest = invoice amount × (Bank of England base rate + 8%) ÷ 365 × days overdue
The interest is simple, not compound: it accrues on the original invoice amount only, and it runs daily from the day after payment was due until the day the money actually reaches you. Then you add the fixed compensation sum on top: £40 for debts under £1,000, £70 for £1,000–£9,999.99, £100 for £10,000 or more. One sum per late invoice, on top of the interest.
Three facts about the rate that save freelancers from the usual mistakes:
- It follows the base rate in six-month blocks. The law fixes the rate from the base rate in force on 30 June (for debts overdue 1 July–31 December) or 31 December (for debts overdue 1 January–30 June). Our worked examples all use 11.75%, the rate for debts overdue in the second half of 2026.
- You don’t need a late-payment clause. The right is automatic under the Late Payment of Commercial Debts (Interest) Act 1998, for business-to-business debts, whether or not your invoice or contract mentioned interest.
- A contract rate replaces it. If your contract already sets its own interest rate for late payment, that rate governs and statutory interest does not stack on top.
Worked example 1: £900 invoice, 45 days overdue
This is the classic freelancer scenario: a £900 copywriting invoice with 14-day payment terms that a client has sat on for six and a half weeks.
- Interest: £900 × 11.75% ÷ 365 × 45 = £13.04
- Fixed compensation: £900 is under £1,000, so £40
- Total you can claim: £53.04
Thirteen pounds of interest is not life-changing money, and that is exactly the point most freelancers miss. The £40 compensation is the part that matters at this scale: it turns a token interest figure into something worth mentioning. £53.04 on a £900 invoice is around 6% of the invoice value, and it appears on your very next reminder whether or not the client has apologised yet.
The email line our calculator generates for this case reads:
“Under the Late Payment of Commercial Debts (Interest) Act 1998, this invoice has accrued £13.04 in statutory interest plus the £40 fixed compensation, bringing the amount now due to £953.04. I’d be glad to settle for the original £900 if payment is made this week.”
That last sentence is deliberate: you are offering a quiet, face-saving exit. Most late payments at this scale are disorganisation, not malice.
Worked example 2: £4,200 invoice, 90 days overdue
A £4,200 design project, three months overdue, client stopped replying to the friendly nudges a month ago.
- Interest: £4,200 × 11.75% ÷ 365 × 90 = £121.68
- Fixed compensation: £4,200 sits in the £1,000–£9,999.99 band, so £70
- Total you can claim: £191.68
At around 1.35% a day of the invoice ticking away (£1.35/day on this one), the numbers now carry their own argument. Three months of delay costs the client close to £192. Enough to notice, and enough to make settling the £4,200 principal the obviously cheaper option.
The tone shifts here. Keep it factual, add a deadline, name the next step:
“This invoice (INV-2026-118, £4,200, due 21 Jul 2026) is now 90 days overdue. Statutory interest of £121.68 and the £70 fixed compensation bring the amount due to £4,391.68, and interest continues to accrue daily. Please settle the balance by 28 Oct 2026. If payment is not received, I will refer this to my debt-recovery solicitor without further notice.”
Notice what the email does not do: no threats you won’t follow through on, no anger, no mention of the Commercial Payments Bill or the courts. It states numbers, dates, and a consequence. If you are unsure where you are in the escalation ladder — reminder, firm demand, letter before action, Money Claims Online — our guide to chasing late payments maps the full sequence.
Worked example 3: £12,000 invoice, 30 days overdue
A £12,000 development milestone, payment terms of 14 days, now 30 days overdue. Large enough to hurt your cash flow; fresh enough that the relationship probably still matters.
- Interest: £12,000 × 11.75% ÷ 365 × 30 = £115.89
- Fixed compensation: £12,000 is £10,000 or more, so £100
- Total you can claim: £215.89
Here the interest accrues at £3.86 a day — over £115 in a single month on money that should have been yours. With big-ticket clients, the smart play is to state the number while protecting the relationship:
“Quick flag on invoice INV-2026-204 (£12,000, due 19 Sep 2026): it’s now 30 days overdue, and statutory interest (£115.89) plus the fixed £100 compensation bring it to £12,215.89. I know these things slip through accounts. Could you confirm a payment date? Happy to accept the original £12,000 if it’s settled by Friday.”
Yes, you are offering to waive the £215.89 in exchange for prompt payment. That is not weakness; it is the standard, sensible trade. You keep the leverage visible while giving the client’s accounts department an easy win to take to their manager.
How to use the calculator in 60 seconds
The late payment interest calculator does this arithmetic for you, pre-filled with the current base rate:
- Enter the invoice amount: the original amount, before interest or compensation.
- Enter the dates it was due and paid (or leave “paid” empty for today). The calculator counts the days overdue automatically.
- Check the base rate. It is pre-filled with the rate verified on this page’s last update; if your invoice became overdue in a different half-year, adjust it to the rate then in force.
- Read the three numbers: interest accrued, fixed compensation, and the total, plus a per-day figure so you can say “this is costing you £X a day”.
- Use the “Copy as a polite email line” button to drop a ready-made sentence into your chasing email.
Not sure when the invoice actually became overdue? Terms, delivery dates and the 30-day default interact in ways people get wrong. Our statutory payment deadline calculator works it out from your invoice date and payment terms, and shows exactly when statutory interest and the compensation sum start running.
When the number is most useful (and when to hold back)
Be honest about how this works in practice. Most freelancers never actually collect the interest. They use the figure as leverage. A calm, factual line stating what the Act says you could claim resolves more invoices than any threat. That is the calculator’s real job: turning a vague sense of being wronged into a number with a legal citation behind it. I’ve never collected a penny of the interest myself, but I still run the numbers before every firm reminder.
Hold the number back for first-time, small-scale lapses with clients you want to keep. A polite reminder without figures is enough for an invoice a week late. Deploy the numbers once a pattern emerges: the second reminder, the ignored deadline, the client who always pays at day 60. And always keep the offer to settle for the principal on the table. The interest is a stick you are willing not to use.
One more practical note: the fixed compensation sum is owed per late invoice, so three overdue invoices from the same client mean three sums. The interest is per invoice too. When a chronic late payer has stacked up several, running them all through the calculator before your next email is rarely a waste of an afternoon.
The exceptions, quickly
- Consumer clients are out. The Act covers business-to-business debts (companies, sole traders, partnerships, agencies). Invoices to private individuals acting as consumers are outside it unless your own contract includes a late-payment clause.
- A contract rate replaces statutory interest. If your terms already set a rate, that rate governs. (A nominal rate like “0%” is very unlikely to survive a challenge, since the law requires a substantial remedy.)
- Payment terms have limits. For business clients, agreed payment dates must usually be within 60 days; longer is only lawful if it is fair to both sides. For public authorities, the usual limit is 30 days. With no agreed date, the default is 30 days after the later of invoice and delivery.
- Six months on the rate. As noted, the statutory rate locks to the base rate in force on 30 June or 31 December. If your debt crossed a half-year boundary, the rate for the period it became overdue is the one that applies.
For the full legal picture (the Act, the substantial-remedy exception, and what the 2026 Commercial Payments Bill would change), read our plain-English guide to your UK late payment rights.
Figures verified against gov.uk and the Bank of England on 19 Oct 2026. Statutory rate: BoE base rate 3.75% + 8% = 11.75% for debts overdue 1 July–31 December 2026; next MPC decision 5 Nov 2026.