Late payment interest calculator

How the calculator works

• Rate = 8% + the Bank of England base rate on the reference date (UK statutory interest), or the rate in your own terms.
• Interest per day = invoice total × rate ÷ 365. It is simple interest, not compound.
• Interest = interest per day × days past the due date, counted from the day after it was due.
• Fixed compensation (UK statutory only) = £40 if the invoice is under £1,000, £70 from £1,000 to £9,999.99, £100 from £10,000, per invoice.

The base rate changes, so the calculator asks for it rather than guessing. Look up the Bank of England's rate on 30 June if the invoice went late between July and December, or on 31 December if it went late between January and June. That rate then applies for the whole time the invoice stays unpaid.

Recent reference rates

Invoice went late	Base rate on	Base rate	Statutory interest
1 July 2026 to 31 December 2026	30 June 2026	3.75%	11.75% a year
1 January 2026 to 30 June 2026	31 December 2025	3.75%	11.75% a year
1 July 2025 to 31 December 2025	30 June 2025	4.25%	12.25% a year

From the Bank of England's Bank Rate history, checked 28 October 2026. For an older invoice, look up the rate on the 30 June or 31 December before it went late.

A worked example

A design studio in Leeds invoiced a client £6,000 including VAT on 14-day terms. The client paid 45 days after the due date. Made-up figures, and a base rate of 4% to show the arithmetic.

• Rate: 8% + 4% = 12% a year.
• Interest per day: £6,000 × 12% ÷ 365 = £1.97.
• Interest for 45 days: £1.9726 × 45 = £88.77.
• Fixed compensation: the invoice is between £1,000 and £9,999.99, so £70.
• Claim: £88.77 + £70 = £158.77, so £6,158.77 in all. Every further month unpaid adds about £59.18.

In Australia, a Brisbane plumber whose terms say 10% a year on overdue accounts, with an $8,800 invoice (GST included) 60 days late: $8,800 × 10% ÷ 365 × 60 = $144.66. No fixed compensation: that is a UK rule.

Press "Load the worked example" above to see the Leeds figures in the calculator.

Should you actually charge it?

Most small businesses never do, and it is your call. £158.77 is real money, but so is a client worth £30,000 a year. What tends to work:

• Put it in your terms before the work, so it is no surprise. Invoice payment terms: 7, 14 or 30 days? covers what to write and how much cash each choice ties up.
• Quote the figure in a reminder ("statutory interest of £88.77 and compensation of £70 now apply") and waive it if they pay this week. Xero invoice reminders shows how to schedule them.
• Charge it to customers who are always late, as a separate invoice that says what it is for, and keep the original invoice amount unchanged.

Finding late invoices in Xero

1. Run Accounting › Reports › Aged Receivables Summary and look at the 31-60, 61-90 and older columns. The aged debtors guide explains each column.
2. Open the contact to see each invoice's due date, then count the days for the calculator.
3. To see how long customers take on average, and how much cash that ties up, use the debtor days calculator. Who owes me money in Xero covers the rest of the chase.

Questions